Indian Oil Corp (IOC) has posted a decline in sales by 29% in the September quarter over the same period last year. However, profits rose to Rs613.79 crore against a loss of Rs5,888.99 crore in the same period last year when crude oil price had propelled to a record high.
Softer crude oil price, which has reduced the loss in sales of petrol and diesel, helped IOL record profits this quarter. Revision in auto fuel price in July and strong rupee also has been of help. However, any increase in the crude price will raise the under-recovery of the refineries which sell refined products at a price below the production cost. The loss will be covered by the issue of government bonds.
This quarter, the government issued bonds worth over Rs10,306 crore to three oil marketing PSUs of which IOC received bonds worth Rs6,207 crore. IOC will use the profit for its planned expansion to raise the refining capacity by a third in the next three years. In the current FY Indian Oil plans to spend Rs13,500 crore to add to processing capacity and build chemical plants which are expected to increase the cash flow and produce better quality fuels. The company has also decided to issue 1:1 bonus for which record date has been fixed at 30th October. –Subrata Das [email protected]