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Indian Oil March quarter profit drops 35% on lower refining margin

LiveMint logoLiveMint 29-05-2014 Utpal Bhaskar

New Delhi: Indian Oil Corp. Ltd’s (IOC) fiscal fourth quarter profit dropped 35% on lower refining margin, although it benefited from the government’s over-compensation for selling fuel below cost.

Net profit fell to `9,390 crore in the three months ended 31 March from `14,513 crore a year earlier. Revenue increased 5.7% to `1,34,867 crore.

IOC reported a 40% increase in net profit in 2013-14 to `7,019 crore. Annual revenue increased by 5.8% to `4,47,096 crore.

“An acceleration in global economy is projected,” chairman and managing director R.S. Butola said on Thursday. “We are also expecting a mild upturn in the second and third quarter this year, which is likely to strengthen further.”

The average price of crude oil in the Indian energy basket in the last fiscal was $105.5 a barrel, compared with $108 a barrel in 2012-13. Indian firms couldn’t benefit from the depressed prices because of the rupee weakening against the dollar.

“While there is new worldwide capacity coming up, there is a pressure on demand,” Butola said.

Diesel demand in India turned negative for the first time in a decade in 2013-14 after growing annually at around 6.5%. India imports more than 80% of its energy needs.

IOC’s refinery margin fell to $2.17 a barrel in the March quarter from $3.33 a barrel a year ago. Refinery margin is the revenue earned from processing a barrel of crude. The annual refining margin increased to $4.24 per barrel compared with $3.16 a barrel in 2012-13.

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