Indian Oil net profit jumps 50% despite unpaid LPG subsidies

New Delhi: Indian Oil Corporation (IOC) on Wednesday reported a 50 per cent jump in its March quarter net profit as inventory gains negated losses on sale of subsidised domestic cooking gas LPG.

Standalone net profit of Rs 7,264.85 crore in January-March - the fourth quarter of April 2024 to March 2025 financial year - was compared to Rs 4,837.69 crore earnings in the same period a year back, according to a stock exchange filing of the company.

Profit was also higher quarter-on-quarter when compared to Rs 2,873.534 crore earnings in the October-December 2024 period.

The earnings soared as the company processed crude oil bought at lower prices and sold products made from it when prices had risen, resulting in inventory gains.

These inventory gains undid Rs 5,601 crore of losses on LPG sales and lower refining margins.

The firm earned USD 7.85 on turning every barrel of crude oil into fuel in the quarter as compared to USD 8.39 per barrel gross refining margins a year back, IOC chairman A S Sahney said in a post-earnings media briefing.

IOC had an inventory gains in Q4 as compared to losses in the previous year, he said without disclosing exact numbers.

"Our performance has improved on all physical parameters and so has our efficiency," he said. "We have started to regain market share." IOC and other state-owned fuel retailers sold cooking gas LPG at rates lower than cost but were not compensated by the government in 2024-25 fiscal (FY25).

LPG is a subsidised fuel, and the government is supposed to provide subsidies to the three retailers to make up for the difference between the retail selling price and the actual cost of production.

This, however, did not happen in FY25. Earlier this month, the government hiked LPG price by Rs 50 per 14.2-kg cylinder to cover some of the gap between cost and retail price. Domestic cooking gas is still sold at a loss.

IOC in the filing said it lost Rs 5,601 crore on selling domestic LPG at below cost in the January-March (Q4) and Rs 19,926 crore in the full FY25.

Alongside raising LPG prices, the government had hiked excise duty on petrol and diesel by Rs 2 per litre each to raise about Rs 32,000 crore in additional revenue. This additional revenue, Oil Minister Hardeep Singh Puri had on April 7 said, could be used to provide LPG subsidy to BPCL and other retailers.

Revenue from operations fell 1 per cent to Rs 2.17 lakh crore in Q4.

For the full fiscal FY25, IOC reported a net profit plunging to Rs 12,962 crore on a revenue of Rs 8.45 lakh crore.

In 2023-24, IOC had reported highest ever annual profit of Rs 39,618.84 crore after it, as well as other state-owned fuel retailers Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), did not pass the benefit of a reduction in global oil prices to consumers in form of a petrol and diesel price cut. The three firms earned handsome margins on two fuels, resulting in bumper profits.

IOC said its refineries processed 18.548 million tonnes of crude oil in Q4, up from 18.282 million tonnes a year back. In FY25, refinery throughput was 71.564 million tonnes as opposed to 73.308 million tonnes in the previous fiscal. The lower thruput was due to planning shutdowns.

Market sales rose to 24.601 million tonnes in Q4 and to 100.477 million tonnes in FY25.

"FY25 year is the first year we crossed 1OO million tonnes," he added.