Oil marketing firms’ net suffers on selling fuel below cost
New Delhi 31-May-2011

IndianOil (IOC), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) would have together posted an additional net profit of Rs.5,246 crore for the year ended 31 March had they not absorbed a notional cumulative loss of Rs.6,894 crore on selling fuel below cost.

The three state-owned oil marketeers registered a cumulative net profit of Rs.10,531.16 crore in fiscal 2011 (FY11). Notional cumulative loss on selling fuel below cost increased 23% from Rs.5,621 crore that they absorbed in FY10.

This happened at a time when crude oil price in the Indian basket for the last fiscal was $113.09 per barrel.

The losses would have been greater had the government not directed upstream companies such as Oil and Natural Gas Corp. Ltd (ONGC), Oil India Ltd (OIL) and GAIL (India) Ltd to pay Rs.30,295.75 crore as compensation to state-owned oil retailers.

The operating environment for the firms is marked by uncertainties as they continue to sell below cost and are not sure about the extent to which they will be reimbursed by the government and when.

IOC in an announcement on Monday said that net profit in FY11 decreased 27% to Rs.7,445.48 crore. The company said profit would have increased by an additional Rs.3,200 crore had it not absorbed a loss of Rs.3,803 crore on selling fuel below cost in FY11, a 20% increase over Rs.3,159 crore in losses in FY10. The biggest refiner in the country posted a 21.26% increase in revenue to Rs.3.28 trillion.

IOC, which has a 49.6% share in the country’s market, saw net profit for the March quarter dip 30% to Rs.3,905 crore from Rs.5,557 crore in the year-ago period. Revenue from operations rose 31% to Rs.93,843 crore in the quarter.

In a separate announcement on Monday, BPCL said net profit in FY11 increased 0.58% to Rs.1,546.68 crore. The company’s profit would have increased by an additional Rs.1,046 crore had it not absorbed a loss of Rs.1,584 crore on selling fuel below cost, a 28.05% increase over Rs.1,237 crore in losses in FY10.

BPCL saw net profit for the March quarter increase 33% to Rs.935.48 crore from Rs.703.18 crore in the year-ago period. Revenue from operations rose 21% to Rs.48,311.46 crore in the quarter.

While HPCL’s net profit in FY11 increased 18% to Rs.1,539 crore, the company said its profit would have increased by Rs.1,000 crore more had it not absorbed a loss of Rs.1,509 crore on selling fuel below cost, a 23.18% increase over Rs.1,225 crore in losses in FY10.

The marketeers increased petrol prices on 15 May and may soon raise them again.

“We have to firm up a view,” said R.S. Butola, chairman, IOC.

A decision on increasing the prices of diesel and cooking gas is expected to be taken by an empowered group of ministers on pricing of petroleum products, headed by finance minister Pranab Mukherjee. The group is expected to meet on 9 June.

In another development, ONGC said net profit in FY11 increased 13% to Rs.18,924 crore. It said profit would have increased by an additional Rs.14,247 crore had it not paid out a subsidy of Rs.24,892 crore as compensation to state-owned oil marketeers to partially offset losses on selling fuel below cost.

ONGC saw net profit for the March quarter decrease 26% to Rs.2,791 crore from Rs.3,776 crore in the year-ago period. Revenue from operations rose 5% to Rs.15,554 crore in the quarter.

While OIL results are to be announced on Tuesday, state-owned GAIL’s net profit in FY11 increased 13% to Rs.3,561 crore from Rs.3,140 crore in FY10.

India’s largest gas transmission company said profit would have increased by 25% had it not paid out a subsidy of Rs.2,111 crore as compensation to state-owned oil marketeers.

The following terms and conditions will be deemed to have been accepted by the User on usage of the website www.iocl.com. You are requested to read them carefully before you use the services of this site.

The term User shall refer to the user who is browsing the site. The term IndianOil shall refer to Indian Oil Corporation Limited. The term Site refers to www.iocl.com owned and monitored by IndianOil.
By using the Site, you agree to follow and be bound by the following terms and conditions concerning your use of the Site. IndianOil may revise the Terms of Use at any time without notice to you. Areas of the Site may have different terms of use posted. If there is a conflict between the Terms of Use and terms of use posted for a specific area of the Site, the latter shall have precedence with respect to your use of that area of the Site.
ndianOil may terminate User's access at any time for any reason. The provisions regarding to disclaimer of warranty, accuracy of information, and indemnification shall survive such termination. IndianOil may monitor access to the Site.
All content present on this site is the exclusive property of IndianOil. The software, text, images, graphics, video and audio used on this site belong to IndianOil. No material from this site may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from IndianOil. All rights not expressly granted herein are reserved. Unauthorized use of the materials appearing on this site may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. IndianOil is a registered trademark of Indian Oil Corporation Ltd. This trademark may not be used in any manner without prior written consent from IndianOil.
IndianOil does not make any warranties, express or implied, including, without limitation, those of merchantability and fitness for a particular purpose, with respect to any information, data, statements or products made available on the Site.
The Site, and all content, materials, information, software, products and services provided on the Site, are provided on an "as is" and "as available" basis. IndianOil expressly disclaims all warranties of any kind, whether express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose and non-infringement.
IndianOil shall have no responsibility for any damage to User's computer system or loss of data that results from the download of any content, materials, information from the Site.
IndianOil may change or discontinue any aspect of its website at any time, including, its content or features. IndianOil reserves the right to change the terms and conditions applicable to use of the Site. Such changes shall be effective immediately upon notice, which shall be placed on the Site.
In no event will IndianOil be liable for damages of any kind, including without limitation, direct, incidental or consequential damages (including, but not limited to, damages for lost profits, business interruption and loss of programs or information) arising out of the use of or inability to use IndianOil's website, or any information provided on the website, or in the Products any claim attributable to errors, omissions or other inaccuracies in the Product or interpretations thereof. Some jurisdictions do not allow the limitation or exclusion of liability. Accordingly, some of the above limitations may not apply to the User.
User agrees to indemnify, defend and hold IndianOil harmless from and against all losses, expenses, damages and costs, including reasonable attorneys' fees, arising out of or relating to any misuse by the User of the content and services provided on the Site.
The information contained in the Site has been obtained from sources believed to be reliable. IndianOil disclaims all warranties as to the accuracy, completeness or adequacy of such information.
IndianOil makes no warranty that: (a) the Site will meet your requirements; (b) the Site will be available on an uninterrupted, timely, secure, or error-free basis; (c) the results that may be obtained from the use of the Site or any services offered through the Site will be accurate or reliable.
The User's right to privacy is of paramount importance to IndianOil. Any information provided by the User will not be shared with any third party. IndianOil reserves the right to use the information to provide the User a more personalized online experience.
The Site provides links to web sites and access to content, products and services from third parties, including users, advertisers, affiliates and sponsors of the Site. You agree that IndianOil is not responsible for the availability of, and content provided on, third party web sites. The User is requested to peruse the policies posted by other web sites regarding privacy and other topics before use. IndianOil is not responsible for third party content accessible through the Site, including opinions, advice, statements and advertisements, and User shall bear all risks associated with the use of such content. IndianOil is not responsible for any loss or damage of any sort User may incur from dealing with any third party.

The term User shall refer to the user who is browsing the site. The term IndianOil shall refer to Indian Oil Corporation Limited. The term Site refers to www.iocl.com owned and monitored by IndianOil.
By using the Site, you agree to follow and be bound by the following terms and conditions concerning your use of the Site. IndianOil may revise the Terms of Use at any time without notice to you. Areas of the Site may have different terms of use posted. If there is a conflict between the Terms of Use and terms of use posted for a specific area of the Site, the latter shall have precedence with respect to your use of that area of the Site.
ndianOil may terminate User's access at any time for any reason. The provisions regarding to disclaimer of warranty, accuracy of information, and indemnification shall survive such termination. IndianOil may monitor access to the Site.
All content present on this site is the exclusive property of IndianOil. The software, text, images, graphics, video and audio used on this site belong to IndianOil. No material from this site may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from IndianOil. All rights not expressly granted herein are reserved. Unauthorized use of the materials appearing on this site may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. IndianOil is a registered trademark of Indian Oil Corporation Ltd. This trademark may not be used in any manner without prior written consent from IndianOil.
IndianOil does not make any warranties, express or implied, including, without limitation, those of merchantability and fitness for a particular purpose, with respect to any information, data, statements or products made available on the Site.
The Site, and all content, materials, information, software, products and services provided on the Site, are provided on an "as is" and "as available" basis. IndianOil expressly disclaims all warranties of any kind, whether express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose and non-infringement.
IndianOil shall have no responsibility for any damage to User's computer system or loss of data that results from the download of any content, materials, information from the Site.
IndianOil may change or discontinue any aspect of its website at any time, including, its content or features. IndianOil reserves the right to change the terms and conditions applicable to use of the Site. Such changes shall be effective immediately upon notice, which shall be placed on the Site.
In no event will IndianOil be liable for damages of any kind, including without limitation, direct, incidental or consequential damages (including, but not limited to, damages for lost profits, business interruption and loss of programs or information) arising out of the use of or inability to use IndianOil's website, or any information provided on the website, or in the Products any claim attributable to errors, omissions or other inaccuracies in the Product or interpretations thereof. Some jurisdictions do not allow the limitation or exclusion of liability. Accordingly, some of the above limitations may not apply to the User.
User agrees to indemnify, defend and hold IndianOil harmless from and against all losses, expenses, damages and costs, including reasonable attorneys' fees, arising out of or relating to any misuse by the User of the content and services provided on the Site.
The information contained in the Site has been obtained from sources believed to be reliable. IndianOil disclaims all warranties as to the accuracy, completeness or adequacy of such information.
IndianOil makes no warranty that: (a) the Site will meet your requirements; (b) the Site will be available on an uninterrupted, timely, secure, or error-free basis; (c) the results that may be obtained from the use of the Site or any services offered through the Site will be accurate or reliable.
The User's right to privacy is of paramount importance to IndianOil. Any information provided by the User will not be shared with any third party. IndianOil reserves the right to use the information to provide the User a more personalized online experience.
The Site provides links to web sites and access to content, products and services from third parties, including users, advertisers, affiliates and sponsors of the Site. You agree that IndianOil is not responsible for the availability of, and content provided on, third party web sites. The User is requested to peruse the policies posted by other web sites regarding privacy and other topics before use. IndianOil is not responsible for third party content accessible through the Site, including opinions, advice, statements and advertisements, and User shall bear all risks associated with the use of such content. IndianOil is not responsible for any loss or damage of any sort User may incur from dealing with any third party.

IndianOil in Media