Higher refining margin and the payment of reimbursement helped state-owned Indian Oil Corporation (IOC), the country's largest oil marketing company, report a net profit of Rs 5,294 crore for the quarter ended September 30, up manifold from Rs 284 crore in the corresponding period a year ago.
During the quarter, IOC received compensation of Rs 7,220 crore from the government for selling diesel, cooking gas and kerosene at government-controlled prices. The money was meant for the first half of 2010-11, but came all in the second quarter. Net sales for the quarter rose 14.72 per cent to Rs 69,746 crore.
IOC Chairman BM Bansal said the company incurred gross under-recovery (for selling diesel, cooking gas and kerosene at government-controlled prices; petrol prices were decontrolled on June 25) of Rs 6,407 crore during the quarter. The figure for the first quarter was Rs 11,014 crore. Currently, IOC incurs a loss of Rs 2.62 on every litre of diesel, Rs 15.71 on every litre of kerosene and Rs 210 on every cylinder of cooking gas.
Gross refining margin for the quarter was $6.63 per barrel, up over 83 per cent from $3.62 in the same quarter last year.
On the company's follow-on public offer that is expected to happen in the last quarter of 2010-11, Bansal said 18 merchant bankers are in the fray. The company is expected to draw up the final list of up to six merchant bankers by November 20. IOC will sell 10 per cent of its expanded equity to mobilise about Rs 9,000 crore from the market. Simultaneously, the government will also sell 10 per cent in the company. Bansal said the government was expected to bring clarity on compensation mechanism before the stake sale.