IOC net zooms 247% on refining margins
New Delhi   29-May-2010

INDIA'S largest fuel retailer IndianOil (IOC) has reported a 247% jump in its net profit at Rs 10,220 crore for 2009-10 despite absorbing Rs 3,159 crore revenue loss on account of selling cooking fuel below cost.

IOC chairman BM Bansal said, the good performance in 2009-10 was due to better refinery margins and higher capacity utilisation. Company's share dosed at Rs 341.3 on the BSE, up 1.25%. The company's average gross refinery margin was $4.47 a barrel in 2009-10 compared to $3.69 a barrel in the previous year. Average capacity utilisation of its refineries was 100% in 2009-10, he said. Better inventory management (Rs 2,541 crore), lower interest cost (Rs 446 crore) and earnings from foreign exchange (Rs 940 crore) also added to the bottomline.

The company could now revive projects it had put on the back burner due to cash crunch. "We are re-examining projects in hand and prioritising them," Mr Bansal said.

Its Rs 22,300 crore petrochemical project could be the first one. The project was part of its green field refinery-cum-petrochemical project at Para dip (Orissa). Due to cash crunch it had decided to implement only the 15 million tonnes refinery at a cost of Rs 29,777 crore and deferred the petrochemical project.

Company's total turnover (including excise duty) for 2009-10 was Rs 271,074 crore.

The overall petroleum products consumption in the country grew at 3.4% during the year, IndianOil managed to notch up a growth of 4.6% registering a sales volume of 63.7 million tonne.

The company's revenue loss of Rs 7,548 crore for selling petrol and diesel below cost was fully compensated through upstream discount as per a subsidy-sharing formula for 2009-10. But the government did not fully compensate its revenue loss on account of selling cooking fuel. It received a compensation of Rs 15,172 crore for selling cooking gas and kerosene below cost, which was Rs 3,159 crore less than the total loss.

IOC's board has proposed Rs 13 per share dividend for 2009-lOfiscal.

IOC is losing Rs 105 crore in revenues everyday on selling fuel below cost. While private companies are free to sell petroleum products at market-determined prices since 2002, state-owned oil marketing companies are forced to sell petrol diesel, kerosene and cooking gas at the government-determined rates, which are often below cost. The under-recovery (revenue loss) on petrol is Rs 5.06 a litre, Rs 5.31 a litre on diesel Rs 18.80 a litre on kerosene and Rs 254.37 per LPG cylinder," Mr Bansal said.

An empowered group of ministers headed by finance minister Pranab Mukherjee is likely to meet on June 7 to decide on freeing petrol and diesel prices from the government's control. Other members of the EGoM are oil minister Murli Deora, agriculture minister Sharad Pawar, chemical & fertiliser minister MK Alagiri, railway minister Mamata Banerjee, road transport minister Kamal Nath and Planning Commission deputy chairman Montek Singh Ahluwalia.