Low crude prices help Lanka IOC to post profit in March

The local unit of India’s Indian Oil Corporation Limited (IOC) turned a net profit of Rs. 1.56 billion with an earnings per share of Rs.2.92 for the quarter ended March 31, 2016 (4Q16) from a net loss of Rs.1.06 billion incurred for the corresponding quarter amid lower global crude oil prices, the interim financials showed. The top-line grew by 16.5 percent year-on-year (yoy) to Rs.18.4 billion, but the cost of sales dropped by 3 percent yoy to Rs.15.7 billion to result in a gross profit of Rs.2.7 billion in comparison to a loss of Rs.394.3 million a year ago. Global crude prices have been see-sawing in recent times between US $ 45 and US $ 50 a barrel and talks between OPEC and non-OPEC countries failed to strike a deal in cutting production. Crude oil supply has actually been increased as Iran is coming out of an embargo on oil in a United States brokered deal recently.

Meanwhile, the company ended the year with a Rs.2.2 billion net profit with an earnings per share of Rs.4.21, an increase of 18 percent. However, the top line declined by 11 percent to Rs. 71.3 billion due to lower administered selling prices but the cost of sales fell by 13 percent to Rs.65.5 billion. The gross profit expanded to Rs. 5.8 billion from Rs.4.7 billion a year before. Lanka IOC PLC however is prone to victimization due to the lack of a pricing formula and fuel price is a tool continually manipulated by political masters in Sri Lanka to garner votes on their re-election bids. Indian Oil Corporation Limited, India held a 75.2 percent stake in the company while the state controlled private sector pension fund, Employees’ Provident Fund had accumulated shares in the company up to 0.46 percent stake and is the tenth largest shareholder. Three months ago the EPF held 0.33 percent stake and was the fifteenth largest shareholder.