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IOC Chairman B Ashok spoke with BTVI on the company’s first-quarter earnings. Excerpts:
Could you tell us what led to the high gross refining margin you’ve been able to post for Q1FY17?
Our GRM for the first quarter was $9.98/bbl. One significant reason for its increase is the firming up of crude oil prices, because of which we have had a certain amount of inventory gains, both in terms of crude as well as finished product. Besides that, the operational parameters have also been excellent.
Our refineries have been operating at 110 per cent capacity utilisation. So is the case with our pipelines which have been operating at 130 per cent capacity utilisation.
Our marketing and sales have also improved. All of this has resulted in a very good performance. GRM is basically because of refinery operations — the inventory gains that we saw.
What has been IOC’s crude-sourcing strategy? Your competitors in the private sector have significantly stepped up cheaper crude from Iraq and Iran. What have you done?We have consciously maintained a proportion between the termed quantities that we get on procurement, and those that we buy on spot basis.
Recently, the Centre also gave us the mandate that allows us to follow our own policies in terms of sourcing crude.
We have a Board-approved policy where we have brought in more flexibility by cutting down the time substantially. Over the last few months we have also been experimenting on this.
By cutting down the termed quantities and increasing the spot quantities slightly, we are able to bring in a lot more flexibility into our system and source crude which are opportunity crude as per the marketplace pricing. We have been able to make significant gains due to that.
You have offered a bonus share issue at 1:1. Can you tell us why?
IOC has a history of giving bonus shares over time.
The last was in 2009. Since we have had an excellent performance over the past few years, we thought that it is time to recognise that and give some additional value to the shareholders, and this was the appropriate time.
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