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Indian Oil Posts Unexpected Loss in Last Quarter

NEW DELHI--Indian Oil Corp.(530965.BY), the country's biggest crude oil refiner and fuel retailer, Thursday posted a loss of 8.98 billion rupees ($146 million) for the three months ended in September, hurt by a fall in global crude oil prices.

The state-run company had posted a profit of 16.84 billion rupees in same quarter last year.

Revenue was almost flat at 1.11 trillion rupees.

The average forecast in a poll of five brokerages by The Wall Street Journal was for the company to post profit of 12.57 billion rupees and revenue of 1.18 trillion rupees in the fiscal second quarter.

Indian Oil Chairman B. Ashok said earnings fell due to a loss of 42.72 billion rupees on inventory of crude oil and fuel products due to the decline in oil prices. Global crude oil prices have fallen 25% since the beginning of the year.

Mr. Ashok said gross refining margin -- earned by converting a barrel of crude into fuel products -- contracted during the quarter. The margin stood at -$1.95 a barrel compared with $7.45 last year.

Financial performance of state-run refining and fuel-marketing companies is dependent heavily on compensation from the government and upstream oil exploration companies for selling some fuel products at state-set below-market rates.

However, the government doesn't pay the compensation periodically, which hurts the performance of fuel retailers.

Indian Oil didn't say how much compensation it got during the quarter or how much of the losses on below-market sales it had to bear.

The Wall Street Journal
Published on:
November 13, 2014
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