Inventory losses due to volatility in crude oil prices led Indian Oil Corporation to incur a net loss of ₹329.17 crore for the second quarter of the current fiscal 2015-16.
However, this was less than half of the ₹898.46-crore loss incurred during the same quarter last year.
The company incurred an inventory loss of ₹5,137 crore during the quarter against ₹4,372 crore in the same quarter last year.
Due to this, the company’s gross refining margin also fell to $0.9 per barrel.
Inventory losses are incurred by oil marketing companies when crude oil prices start falling.
This is because companies source the crude oil at higher prices and by the time it reaches the refinery for processing and selling products, the prices have fallen.
Including both crude oil and products, IndianOil has an inventory of 60 days.
During the quarter, the company’s net revenue fell 23.5 per cent to ₹85,384 crore from ₹1,11,663 crore in the same quarter last year.
“Physical performance, sales, refinery throughput has all done well this quarter. Only inventory loss has hit us heavily,” said B Ashok, Chairman, IndianOil.
Giving an update on its expansion plans, Ashok said the Paradip refinery should process about 3 million tonnes of crude this year, while the target is to run it at full capacity of 15 million tonnes in the next fiscal.
Meanwhile, the company is looking to increase its long-term crude oil sourcing from Nigeria. At present, out of 8 million tonnes that it sources from the African nation, only 1.5 million tonnes is through term contracts.
“We have asked them for about 5 million tonnes to come through term contracts,” Ashok said.
The company is also planning to raise long-term sourcing from Iran as and when the opportunity arises.
However, Ashok said ‘nothing specific’ to that effect has yet happened.
On Tuesday, the company’s shares closed 1.18 per cent higher on the BSE at ₹401.45.