Indian Oil Corporation (IOC) posted a marginal rise in net profit for the second quarter of the ongoing fiscal on Saturday, with lower inventory gains offseting better operational performance.
For the quarter under review, the nation’s largest oil company reported a net profit of Rs 6,360.05 crore, or Rs 6.93 a share, as against Rs 6,227.31 crore, or Rs 6.78 per share, in the year-ago period, the company’s filing to the stock exchanges showed.
On a sequential basis, net profit was higher than Rs 5,941.37 crore earned in the April-June quarter. Officials said the flattish net profit was largely due to lower inventory gains during Q2FY22.
Inventory gains are reported when a company buys raw material (in this case, crude oil) at a particular price but by the time it is able to process it into finished products (petrol, diesel etc), rates have gone up. Since retail rates are benchmarked at prevailing international prices, an inventory gain is booked. Inventory loss is booked when the reverse happens.