Mumbai: Indian Oil Corporation (IOC) , the nation’s biggest refiner, reported a third-quarter profit of Rs1,059 crore in the three months ended 31 December, compared with a loss of Rs6.48 crore for the same quarter a year ago.
For the nine months ended December 2006, the Corporation’s net profit was Rs5,890 crore as against Rs885 crore net profit for the same period of the previous year.
Profits for the quarter and up to December 2006 were higher due to accounting of Oil Bonds towards under-recoveries on the four sensitive products. Last year bonds were issued towards the end of the financial year and hence were not accounted.
Profit for April-December 2006 also includes Rs3,225 crore being profit on sale of 20% ONGC equity.
IOC’s total income rose 23% to Rs55218.42 crore in the quarter as compared to Rs44874.06 crore recorded in the corresponding quarter in 2005.
India caps petrol and diesel prices to shield consumers and gives bonds to government-controlled refiners to partly make up for their loss. The petroleum ministry ordered Indian Oil and state-run refiners to lower petroleum prices by as much as 3.8% on 29 November.
Shares of state-run refiners have lagged behind gains in the benchmark Sensex index and Reliance Industries Ltd, India’s biggest non-state company. Reliance shares surged 94% in the past year, compared with the 1.2% increase in Hindustan Petroleum and the 14% drop in Bharat Petroleum .
“For the coming quarters, profits at these companies will hinge on two things, the direction of the crude oil market and local retail prices,” said R.K. Gupta, who manages $70 billion (Rs30,800 crore) in equities at Credit Capital Asset Management here. “A cut in retail prices without adequate compensation will push these companies into the red.”
Indian Oil could have added Rs3,524 crore to its revenue in the nine months to December had it been allowed to raise fuel prices to keep up with the increase in crude oil costs, the company said.
Prices of diesel, which makes up 40% of the nation’s fuel sales, fell 2.5 %. The cut resulted in Indian Oil losing Rs62.5 crore in sales every week, executive director P.K. Goyal said.
Indian Oil is losing Rs1.50 on every litre of diesel its sells, 24 paise on a litre of petrol, Rs14.50 on a litre of kerosene and Rs140 on every 14.2-kg cylinder of liquefied petroleum gas.