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R.S. Butola in New Delhi on Wednesday. Picture by Ramakant Kushwaha
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New Delhi, Feb. 13: State-owned Indian Oil Corporation (IOC) today posted a 34 per cent growth in its third-quarter net profit on the back of higher refinery margins and government cash support offsetting losses on fuel sales.
The country’s largest fuel retailer by sales said its net profit for the October-December quarter rose to Rs 3,331.96 crore from Rs 2,488.44 crore in the year-ago period.
The firm earned $6.15 on turning every barrel of crude oil into fuel against $5.15 a barrel gross refining margin in the year-ago period.
IOC has seen a turnaround in refinery margins this fiscal, which it began with a negative $4.81 per barrel margin in the first quarter.
IOC chairman R.S. Butola said borrowings had risen about Rs 20,000 crore in the first nine months of this fiscal to Rs 94,908 crore.
“In nine months (April-December), our interest cost was Rs 5,005 crore. This compares with the Rs 5,600 crore interest payout in the full 2011-12 fiscal. In 2010-11, our interest cost was only Rs 3,600 crore. Interest is a big burden today and is increasing every day as the company borrows to meet the deficit on fuel sales,” he said.
IOC and other retailers sell diesel, domestic LPG and kerosene at a price much lower than the cost of production. The government meets less than half of the losses but not on a regular basis, forcing the firms to resort to borrowings to meet even working capital requirement.
Butola said IOC suffered a revenue loss of Rs 67,123 crore in the first nine months of this fiscal. Of this, the government has so far sanctioned Rs 29,568.53 crore as cash subsidy.
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