NEW DELHI/BENGALURU (Reuters) - Indian Oil Corp Ltd IOC.NS, the country's top refiner, posted an 82.7% slump in second-quarter profit on Thursday, missing analysts' estimates by a wide margin on inventory losses and lower refining margins.
IOC, along with subsidiary Chennai Petroleum CHPC.NS, controls about a third of the country's 5 million-barrels-per-day (bpd) refining capacity.
Net profit came in at 5.63 billion rupees ($79.28 million) for the quarter ended Sept. 30, compared with 32.47 billion rupees a year earlier, state-owned IOC said in a filing.
Analysts on average had expected a profit of 39.71 billion rupees, according to Refinitiv data.
Quarterly results were hit by inventory losses, against gains a year ago, IOC Chairman Sanjiv Singh said.
Refiners buy crude and process them into various kinds of fuel and petroleum products. An inventory loss is booked when oil prices drop by the time the company refine and ship products.
IOC's quarterly inventory losses stood at 18.07 billion rupees, against a gain of 28.95 billion rupees a year earlier. Brent crude prices LCOc1 fell 8.7% during the period.
Average gross refining margins - the difference between the cost of crude oil processed and the prices of refined products - shrank to $1.28 per barrel from $6.79 per barrel, while revenue from operations fell 13.2% to 1.32 trillion rupees.
IOC plans to shut units at some of its refineries in the second half of this fiscal year for fuel upgrade and maintenance, its head of refineries, SM Vaidya, said.
It will fully shut its 160,000-bpd Mathura refinery in northern India for two months in November and December, Vaidya said, adding some units at the 150,000-bpd Haldia refinery on the east coast had already been shut.
India targets to shift to Euro VI-compliant fuels from April 1, 2020.
Fuel demand in the world’s third-largest consumer fell to its lowest in more than two years in September, data from the Petroleum Planning and Analysis Cell showed.
Recently, the Indian government relaxed rules for setting up fuel stations in the country after a gap of 17 years, opening the sector dominated by state refiners to non-energy companies.
Singh said the new rules would enhance competition in the market and benefit consumers.
Reporting by Nallur Sethuraman in Bengaluru and Nidhi Verma in New Delhi; Editing by Rashmi Aich and Subhranshu Sahu
Our Standards: The Thomson Reuters Trust Principles.