The net profit of the country’s biggest oil firm, Indian Oil Corporation, zoomed to Rs 8,781.30 crore in the March quarter compared with a loss of Rs 5,185.32 crore in the corresponding quarter a year ago backed by an increase in refining margins as higher crude prices boosted the inventory value.

A company reports inventory gains when raw material (crude) prices rise by the time oil is processed into fuel. Losses are booked when the reverse happens. Brent crude prices jumped about 23 per cent during the March quarter.

IOC earned $10.6 on turning every barrel of crude oil into fuel compared with a negative gross refining margin (GRM), or loss, of $9.64 per barrel a year ago, IOC chairman S. M. Vaidya said in a conference call with reporters.

Without the inventory gain, GRM for the January-March quarter stood at $2.51 per barrel.

Vaidya said the company earned a record net profit of Rs 21,836 crore in the financial year ended March 31, 2021.

The second wave of coronavirus infections has disrupted fuel demand but not to the extent seen in April-June last year, he said.

“Demand hasn’t dropped to that extent,” he said, referring to the fuel demand falling by 49 per cent in April last year and by a fifth in the next month when the country was under a complete and stringent lockdown.

This year, there is no nationwide lockdown and states have imposed less stringent curbs to check the spread of Covid-19.

“Demand destruction is very much there but not to that extent,” he said adding petrol and diesel sales have fallen 15-20 per cent while jet fuel demand continues to be half of the pre-Covid levels.

The fall in demand has prompted companies to reduce the refinery output. IOC ran its refineries at 49 per cent capacity in April last year and at 67 per cent in the following month before hitting a 90 per cent run-rate in June 2020.

The average run for April-June was 69 per cent of the capacity and the throughput had hit 94 per cent in January-March this year. In April, it was 96.1 per cent and it is 84 per cent in May so far, he said.

“We hope it continues at this level for some time,” the chairman said, adding, “It is difficult to state when demand will return to the normal levels.”

IOC’s board of directors at its meeting held on Wednesday declared a final dividend of Rs 1.50 per equity share.