Indian Oil profits thump inventory benefits
India’s top crude oil refinery Indian Oil Corporation Limited (IOCL) on Friday reported an eleven –fold rise in the second quarter profit. This profit gain on inventory beat all predictions made by analysts on higher inventory gains and a jump on refinery margins.
Indian Oil Corporation Limited along with its subsidiary Chennai Petroleum has a control over a third of the country's 5 million barrels-per-day (bpd) refinery capacity. The state owned company’s net profit escalated to 62.72 billion rupees in three months that ended on September 30. The company’s net profit earlier this year was 5.63 billion rupees.
Research analysts on an average had profits expected up to 28.20billion rupees, according to Refinitiv data.
In the September quarter IOCL’s inventory gains were at 74 billion rupees against the inventory loss of 18.07 billion rupees earlier this year, said the Chairman S.M. Vaidya at a press conference.
The processing of crude oil by refiners starts after a gap of 45-60days. Inventory benefits are predicted when oil prices leaps by the time the company refines the crude oil and vends the fuels. The Brent crude price cut down to 0.5% during the July-September quarter after 81% rise in the preceding quarter.
The COVID-19 pandemic lockdown molded fuel demands and squashed margins in the hasty quarter. Only after the lockdown was over fuel margins recovered in the markets.
Vaidya said IOCL is operating its refineries at 95% capacity and is hoping to run them at 100% capacity within 2-3 months. The demands for fuel are also awaited to get back to the pre COVID-19 levels.
IOCL in 2020-21 is focused to spend 262.3 billion rupees, the company also sanctioned 50 billion rupee worth projects, including building up of a polybutadiene rubber project at their Panipat refinery, putting together a jetty and minimal extension in its Bongaigaon refinery.
The Brief. Sign up to receive the top stories you need to know right now.