The Indian Oil Corporation (IOC), India’s largest oil refining and marketing company, has reported a significant 98.6% decline in net profit for the second quarter of the 2024-25 fiscal year. Net profit fell to Rs 180.01 crore, a dramatic decrease from Rs 12,967.32 crore in the same quarter last year and Rs 2,643.18 crore in Q1 of this fiscal year. The sharp decline is primarily attributed to substantial inventory losses, despite the company’s otherwise strong operational performance.
Impact of Inventory Losses
IOC recorded an inventory loss of over Rs 4,200 crore between July and September, contrasting sharply with the Rs 8,300 crore inventory gain reported in the same period in 2023. These losses reflect the volatility of global oil prices, which significantly impacted the company’s earnings.
Decline in Gross Refining Margins
The company’s gross refining margin (GRM), a key profitability metric, plummeted to just USD 1.59 per barrel of crude oil refined into fuel. This represents a significant drop from USD 18.11 per barrel earned in the corresponding period last year. The decline in GRM, compounded by inventory losses, was a major driver behind the steep fall in net profit.
Operational Performance Remains Resilient
Despite financial challenges, IOC demonstrated solid operational performance. The company processed 16.738 million tonnes of crude oil in the second quarter, slightly below the 17.772 million tonnes processed in the same period last year. Petroleum product sales were largely stable at 21.931 million tonnes, compared to 21.941 million tonnes in Q2 of 2023.
Under-Recovery on LPG Sales
Another financial setback was IOC’s under-recovery of Rs 8,870.11 crore on LPG sales as of September 30, reflecting the impact of government-regulated pricing to keep LPG affordable for consumers.
IOC’s Market Leadership and Sector Role
Despite these financial headwinds, IOC remains a dominant force in India’s oil sector, managing nearly 50% of the country’s refining and marketing capacity. The corporation plays a crucial role in ensuring the stability of domestic fuel supplies, underscoring its importance in the Indian energy landscape.
Conclusion
The second quarter of the 2024-25 fiscal year has been a challenging one for Indian Oil Corporation, marked by inventory losses and declining refining margins. However, its solid operational performance and critical role in stabilizing fuel supplies reaffirm IOC’s position as a cornerstone of India’s energy infrastructure. While financial setbacks may weigh on short-term profitability, IOC’s resilience and market dominance continue to underpin its long-term strategic importance.
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