State-owned Indian Oil Corp (IOC) on Wednesday reported a massive Rs 5,185 crore loss in the March quarter after a slump in oil prices resulted in record inventory losses for the company.
The net loss of Rs 5,185.32 crore in January-March compared to Rs 6,099.27 crore net profit in the same period a year back, IOC Chairman Sanjiv Singh told reporters here.
The loss was primarily due to inventory losses and lower refining margins.
The company recorded an inventory loss of Rs 14,692 crore in the fourth quarter of 2019-20 as compared to an inventory gain of Rs 1,787 crore in the same period a year back, he said.
An inventory loss is recorded when a company buys raw material at a particular price but by the time it is shipped and processed into fuel, rates have fallen. Since retail prices are benchmarked to prevailing international prices, an inventory loss is recorded. In case of reverse, an inventory gain is booked.
The company, which had earned USD 4.09 on turning every barrel of crude oil into fuel in January-March 2019, posted a negative gross refining margin of USD 9.64 per barrel. After excluding inventory losses/gain, the GRM for Q4 FY20 was USD 2.15.
Singh said fuel demand, which had evaporated by as much as 70 per cent following the coronavirus lockdown grounding most land and air transport, has returned to 80-85 per cent and is likely to reach 90 per cent by the month-end or in the first half of July.
Petrol demand has risen unexpectedly possibly because most public transport is still off roads and private vehicles are being used for commuting.
Diesel demand is also picking up on increased rural activity and goods transportation.
However, the demand may reach full pre-COVID levels only by the end of the year when industrial and aviation demand picks up, he said.
Airlines were grounded in mid-March and only have only partially resumed operations.
Singh said net profit in 2019-20 fiscal too fell to Rs 1,313 crore from Rs 16,894 crore net profit in the previous year due to inventory losses and lower refining margins.
The company recorded an inventory loss of Rs 12,531 crore in the fiscal ended March 31, 2020 as compared to a gain of Rs 3,227 crore earlier.
Also, it had foreign exchange loss of Rs 3,945 crore as compared to forex loss of Rs 1,503 crore a year back.
The gross refining margin (GRM) during the year 2019-20 was USD 0.08 per barrel as compared to USD 5.41 a barrel in the previous year. The core GRM for current year after offsetting inventory loss/ gain comes to USD 2.64 per barrel, he said.
Revenue from operations of Rs 5,66,950 crore for the financial year 2019-20 compared with Rs 6,05,932 crore in 2018-19.
IOC, he said, sold 89.696 million tonnes of products, including exports, during fiscal 2019-20.
“Our refining throughput for FY 19-20 was 69.419 million tonnes and the throughput of the Corporation’s countrywide pipelines network was 85.349 million tonnes during the year,” he added.
For the fourth quarter of FY20, Indian Oil’s product sales volumes, including exports, stood at 22.206 million tonnes. The refining throughput was 17.103 million tonnes in Q4 FY20 and the throughput of the corporation’s countrywide pipelines network was 20.787 million tonnes during the same period.