3 Reasons why Indian Oil posted Rs 3,388-cr loss in Q1

Indian Oil Corporation Ltd (IOC) posted a loss of Rs 3,388 crore in the first quarter of the current fiscal ended June 2010 compared with a profit of Rs 3,683 crore for the same quarter last year.

This was  because of  3 reasons:

1.Unmet under-recoveries. Tthe under-recovery on account of non-realisation of market-related prices for petrol, diesel, PDS kerosene, and domestic LPG for the quarter was Rs 7,343 crore. The company incurred the loss as it had to sell petrol, diesel, domestic LPG and PDS kerosene below the market price and was not compensated by the Government for it.

2. Lower refining margins. The company's gross refining margins (GRM) for the quarter shrank to $3 a barrel against $7.36 in the corresponding previous quarter due to high crude oil prices. GRM is the difference between the total value of petroleum products and the price of crude oil.

3. Foreign exchange variation losses: The company  suffered exchange losses due to rupee depreciation and higher provisioning of bonds.










Source: http://www.thehindubusinessline.com/2010/07/25/stories/2010072552320100.htm