Oil major Indian Oil first quarter net profit dipped by 45 per cent to Rs 4,548.51 crore as against ₹8,268.98 crore in the corresponding period of FY17. Chairman Sanjiv Singh said: “There was an inventory loss of ₹2,033 crore on crude oil and a loss of ₹2,009 crore on finished products during the quarter. Comparably, there was an inventory gain of ₹3,785 crore on crude oil and ₹3,695 crore on finished products during the same quarter of last fiscal.
There is a lag of at least 60 to 75 days from crude oil procurement to coming out with finished petroleum product. Any fluctuation in oil and product prices during the period has a bearing on the company’s refinery margins.
The gross refinery margins (GRMs) for the company stood at $4.32 per barrel for the latest quarter. Comparably, the GRMs were at $9.98 per barrel in Q1 FY17.
IndianOil Director (Finance) AK Sharma said the GRM without inventory loss stood at $6.44 a barrel this quarter, against $3.56 in the previous year period.
The company has also been incurring an input credit impairment due to the non-inclusion of certain petroleum products under the GST regime. Sharma said: “We have already said that the annual input credit impairment is to the tune of ₹5,000-6,000.”
The GST regime kicked in from July 1 this year, and the credit build-up has started to worry oil companies. Singh said IndianOil is working towards lowering the hit. “We are in talks with State governments to allow us a value added tax deferment to prevent the input credit from stranding,” he added.