Lanka IOC, a wholly-owned subsidiary of the Indian Oil Corporation, managed to stay in the black for the July-September quarter, realising a gross profit of LKR 495.5 million (net profit - LKR 277.8 million).
The gross profit during the same period last year was LKR 617.4 million (net profit – LKR 501.5 million). Higher operating costs had its pressure on margins, leading to a lower profit after tax – a trend that has held through since April this year.
For the period April-September, gross profits were just a shade over LKR 800 million, compared to LKR 675 million during the same period last year. Here too, net profit declined from LKR 385.4 million in April-September 2010 to LKR 241.6 million during the corresponding period this year.
Mr K.R. Suresh Kumar, Managing Director, Lanka IOC, said that positive margins have been realised on the sales of petrol, lubricants, bunker fuel sales and bitumen. Mr Kumar diversified the petrol-diesel focussed Lanka IOC into the sale of lubricants, bitumen and bunkering, realising the tight margins in petrol and the huge losses in diesel.
“Lanka IOC continues to lose on the sales of diesel. Total revenues were higher during April-September this year compared to last year due to higher sales of all products other than diesel,” he said. Diesel sales suffered a 80 per cent drop consequent to the unilateral decision of Lanka IOC to hike prices. But this situation has been negated by the hike in prices of petrol and diesel.
The Sri Lankan government announced an upward revision in prices of petrol and diesel, from October 31 this year, by LKR 12/litre and LKR 8/litre respectively. Lanka IOC is selling both the products at the same price as Ceylon Petroleum Corporation from this date. Lanka IOC and CPC are a duopoly in the petrol- diesel retail segment in Sri Lanka. With higher sales of diesel expected from now on, Lanka IOC losses on account of diesel sales will only continue to mount.