New Delhi: Indian Oil Corp. (IOC) said fiscal fourth-quarter profit surged 85% to Rs3,721 crore, boosted by higher refinery margins.

Chairman B. Ashok told reporters on Thursday that the net profit rose mainly because of inventory gains, higher refining margins and operational efficiencies. The country’s largest state-run refiner had reported a Rs2,005.89 crore profit in the year-ago period.

State-run Indian Oil is in the midst of a massive expansion programme, especially in refining capacity and in liquified petroleum gas (LPG) and liquified natural gas (LNG) import and processing capacity to meet the government’s goal of raising gas consumption in the economy. It is also adding to its petrochemical production capacity to strengthen alternative revenue streams to the refining business.

Indian Oil’s board recommended a final dividend of Re1 per share, which is in addition to the Rs18 per share interim dividend paid during the year. Consolidated net profit for FY2016-17 jumped 64% from a year ago to Rs20,385 crore.

The company exceeded its capital spending target of Rs15,395 crore for the year 2016-17 by over 30%, the chairman said. Indian Oil plans to invest Rs20,737 crore in the current fiscal.

A part of the investment will go into logistics that will see the bulk of the company’s petroleum product transport go off roads and railway lines into long-distance pipelines. A plan is underway to add 7,550 km of long-distance pipeline for petroleum products, which along with another 8,000 km under-construction pipeline projects, will take the company’s total network to 27,550 km over the next few years for fuel transportation.

During the fourth quarter, Indian Oil’s refining margin rose to $8.95 a barrel, sharply higher than the $2.99 a barrel reported in the year-earlier period. Refinery margin for the full financial year 2016-17 was $7.77 a barrel, against $5.06 a barrel in the previous year.

Indian Oil reported an inventory gain of Rs2,634 crore in the three months ended 31 March as compared to an inventory loss of Rs3,417 crore in the same period a year ago. The country’s largest refiner has three weeks of inventory, including crude oil and finished products at various stages starting from vessels in the ocean to pipelines and warehouses.

Revenue from operations jumped 24% to Rs1.22 trillion in the March quarter. The company processed 17.1 million tonnes of crude oil into fuel in the fourth quarter compared to 15 million tonnes in the year-ago period.

Ashok said that standalone annual profit or Rs19,106 crore in 2016-17 was the company’s highest ever. That was facilitated by a record sale of 83.49 million tonnes of products including exports.

PTI contributed to this story.

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