Despite booking more than Rs 10,800 crore in LPG subsidies after the quarter ended, state-owned Indian Oil Corporation (IOC) on Saturday recorded a net loss of Rs 272.35 crore for the months of July to September.
According to a company’s report with the stock markets, the net loss of Rs 272.35 crore contrasts with a profit of Rs 6,360.05 crore in the July-September 2021 period.
The decrease results from a loss of Rs 1,992.53 crore in the prior April-June quarter. Due to the fact that it sold gasoline, diesel, and cooking gas (LPG) below cost, IOC had never before experienced losses in consecutive quarters.
Despite accounting for a one-time gift of Rs 10,801 crore that the government had announced on October 12, the loss in the second quarter of the current fiscal year still occurred.
To compensate three state-owned fuel retailers for the losses they experienced by selling household cooking gas LPG below cost during a two-year period beginning in June 2020, the government on October 12 extended a one-time grant of Rs 22,000 crore to them.
According to a representative, even though the government paid the subsidy after the quarter had ended, it was for the time period up to September 2022, thus it was regarded as adhering to the idea of “accrual-based” accounting.
“The company had suffered under-recoveries from the sale of domestic LPG in the financial year 2021-22 and in six months ended on September 20, 2022. To compensate for under-recoveries, the Government of India has recently approved a one-time grant of Rs 10,801.00 crore. This grant has been recorded under revenue from operations in financial results for the period April- September 2022,” IOC said in the filing.
IOC and other state-owned fuel merchants suffered significant losses in the first quarter of the current fiscal year and failed to raise the cost of gasoline, diesel, and cooking gas LPG to help the government rein in spiralling inflation.
The three companies, who are supposed to adjust gasoline and diesel prices every day in accordance with cost, haven’t altered prices for more than six and a half months already, marking the longest rate freeze since the deregulation of fuel pricing.
The first fiscal quarter of 2022–23, April–June, saw a net loss of Rs 1,992.53 crore for IOC.
The company has now recorded a net loss of Rs 2,264.88 crore for the first half of the current fiscal, as opposed to a profit of Rs 12,301.42 crore during the same period last year.
This was true even if the refining margin reached a record high of USD 25.49 per barrel from April to September, up from USD 6.57 per barrel during the same period last year.
“The core gross refining margin (GRM) or the current price GRM for the period April-September 2022 after offsetting inventory loss/gain comes to USD 22.19 per barrel. However, the suppressed marketing margins of certain petroleum products have offset the benefit of an increase in GRM,” IOC said.
According to the statement, operating revenue increased significantly from Rs 1.69 lakh crore to Rs 2.28 lakh crore in the period from July to September.
In comparison to Q2 of previous year, IOC sold more petroleum products domestically (21.56 million tonnes versus 18.93 million tonnes), and more crude oil was refined (16.09 million tonnes as opposed to 15.27 million tonnes in Q2 of FY22).
However, shipments decreased from 1.24 million tonnes in the same period previous year to 0.86 million tonnes in July-September. This could be as a result of the government imposing a windfall profit tax on the export of gasoline, diesel, and ATF on July 1.