IOC posts record fuel sales but inventory losses tank Q3 profit by 64%
The Hindu
Indian Oil Corporation (IOC) reports 64% drop in net profit due to inventory and forex losses despite record fuel sales.
Indian Oil Corporation (IOC), the nation's biggest oil firm, on Monday (January 27, 2025) reported a 64% drop in its December quarter net profit as inventory and foreign exchange losses eroded gains from record fuel sales.
Standalone net profit of ₹2,873.53 crore in October-December 2024 — the third quarter of April 2024 to March 2025 fiscal year (FY25) - compared to ₹8,063.69 crore earnings in the same period a year back, according to a stock exchange filing of the company.
Profit however surged quarter-on-quarter when compared to ₹189.01 crore earnings in July-September 2024.
IOC Director (Finance) said the decline in profit was mainly because of inventory and foreign exchange losses and a fall in product cracks.
The company had a ₹7,800 crore of inventory loss delta in the third quarter. Another ₹1,900 crore was on account of forex losses.
Inventory loss is booked when a company buys oil at a particular price but by the time it is able to ship to India and process it, the prices would have fallen. And since the product prices are benchmarked to prevailing rates, inventory loss is accounted for. Inventory gains happen if the reverse happens.
Also, cracks — the difference between the cost of raw material (crude oil) and finished product price — dropped. For diesel it came down from $19.18 per barrel in October-December 2023 to $10.8 and that for petrol from $7.04 a barrel to $3.63 per barrel in October-December 2024, he said.
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