Indian Oil’s June-quarter net profit fell 47 per cent to Rs 3,737.50 crore from Rs 7,092.42 crore a year ago because of a drop in refinery margins and inventory gains.
“The variation is majorly on account of lower inventory gain during the quarter,” the company said.
IOC, the nation’s biggest oil firm, recorded an inventory gain of Rs 2,362 crore as opposed to Rs 7,065-crore gain in the April-June 2018 period.
Inventory gain accrues when a company buys raw material (crude in case of IOC) at a given price but by the time it is able to process and convert it into consumable products (fuel in case of IOC), prices have moved up. And, since the final product is sold at a prevailing market price, the company books an inventory gain. Inventory loss occurs when the reverse happens.
