IOC, the nation’s largest oil firm, reported a 81% drop in standalone net profit in April-June — the first quarter of current 2024-25 fiscal year — to INR 2,643.18 crore as opposed to a profit of INR 13,750.44 crore a year back, according to a company filing. Net profit also declined sequentially, when compared to an earning of INR 11,570.82 crore in the March quarter.
Hindustan Petroleum Corporation (HPCL) posted a 90% drop in profit to INR 633.94 crore as compared to an earning of INR 6,765.50 crore in April-June 2023 and INR 2,709.31 crore in the preceding March quarter.
Bharat Petroleum Corporation (BPCL) net profit dropped to INR 2,841.55 crore in April-June from INR 10,644.30 crore a year back and INR 4,789.57 crore in January-March, its filing showed.
The three fuel retailers made extraordinary gains from holding petrol and diesel prices despite a drop in cost. The price freeze was justified in the name of recovering losses they had suffered in the previous year when they did not raise retail prices despite a surge in cost.
The gains arising from the price freeze were eroded with petrol and diesel prices being cut by INR 2 per litre each just before general elections and a fall in refining margins.
Also, the three had uncompensated LPG subsidy, with IOC booking under-recovery of INR 5,156.23 crore in April-June, BPCL INR 2,015.10 crore and HPCL INR 2,443.71 crore, according to the filings.
As per an order of the oil ministry, when market determined price (MDP) of LPG cylinders is less than its effective cost to customer (ECC), oil marketing companies (OMCs) have to retain the difference in a separate buffer account for future adjustment. However, as on June 30, 2024, the three firms had a net negative buffer as the retail selling price was less than MDP.
The three retailers IOC, BPCL and HPCL had reported record profits totalling about INR 81,000 crore in FY24 (2023-24).
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