GST Negative Impact of Rs 300 cr in Q2 of FY 17-18
By TN Ashok /New Delhi
State owned Oil Giant Indian Oil Corporation Ltd (IOCL) today reported its profits have moved south to about Rs 8,245 crore in the half year of Financial Year 2017-18 up-to September this year , but it was still markedly down from Rs 11,391 crore recorded during the last year. “ The profits were lesser than last year because of inventory losses””, Sanjiv Singh, IOCL Chairman and Managing Director said.
Income from operations was however up to touch Rs 2,38,828 crore for the first half of FY 17-18 as compared to 2,07,458 crore in corresponding period of FY 16-17. The net profit for the half year ended 30th September 2017 is Rs 8,245 crore as compared to 11,391 crore during the corresponding period of the previous year majorly due to inventory losses during the current period as against inventory gains during first half of FY 16-17, Singh told newsmen today briefing them about the Q2 results of IOCL in FY 2017-18.
The reported income of IOCL from operations was Rs 1,10,637 crore in Q2 FY 17-18 as compared to Rs 1,00,260 crore in the corresponding quarter of FY 16-17. Profit for the second quarter of FY 17-18 is at Rs 3,696 crore as compared to profit of ₹3,122 crore in the corresponding quarter of FY 16-17.
“IndianOil sold 43.394 million tonnes of products, including exports, during the first six months of 2017-18. Our refining throughput for H1 17-18 was 33.617 million tonnes and the throughput of the Corporation’s countrywide pipelines network was 40.696 million tonnes during the same period. “ The gross refining margin (GRM) during the period Apr-Sept’17 was US$ 6.08 per bbl as compared to US$ 7.19 per bbl in corresponding period of FY 16-17., ” Singh said.
For the second quarter of FY 17-18, IndianOil’s product sales volumes, including exports, was 20.886 million tonnes. The refining throughput was 16.096 million tonnes in Q2 FY 17-18 and the throughput of the Corporation’s countrywide pipelines network was 19.345 million tonnes during the same period. The gross refining margin (GRM) for the second quarter of FY 17-18 was US$ 7.98 per bbl as compared to US$ 4.32 per bbl in the corresponding quarter of FY 16-17.
Answering questions, the IOCL Chairman said prices of petroleum products have moved up as global prices of petroleum products have moved up. Pricing was not influenced entirely by the price of crude which intentionally was see sawing. But its one of the components of the entire pricing mechanism but certainly not the single most component, Singh said and clarified uestions why products were highly priced especially gasoline and diesel when international crude prices were down.
Replying to a question of the burden of subsidies borne by the company, the IOCL Chairman said that on kerosene the subsidy was down to Rs 540 crore in Q2 of FY 17-18 from Rs 1453 crore in the corresponding period of FY 16-17. But subsidies on LPG went up to Rs 1239 crore in Q2 of FY 17-18 from Rs 769 crore in Q2 of FY 16-17.
“ This was because internationally LPG prices was going down and volume of sales of LPG were also going down proportionately”, he said,
ON the question of impact of GST on sales of IOCL products, Finance Director, A K Sharma said GST would have negative impact of Rs 300 crore in just the three months of the 2nd quarter of FY 17-18 ( GST was introduced in July this year ). With less than six months to go for the financial year to end in March, the full negative impact of GST on IOCL sales could be around Rs 1,000 crore, he said.
In a full financial year, that is in FY 2018-19, GST’s outgo could have a negative impact of about Rs 2,000 crore, Sharma said.
The chairman clarified that in earlier years, the company was getting relief on excise and octroi, but this time around, it was being denied “ input credits”. We have to find a way to adjust the GST so that the burden becomes less, he said .
Input credit means that if a company incurs a higher cost of production and the tax on it exceeds the GST at the end sale point, then the higher amount of tax paid is returned to the company in the form of an incentive , called input credit.
“But all this is not likely to have any effect on the overall balance sheet of the IOCL”, Singh said.
On whether products of petroleum products such as gasoline (petrol) and diesel could come down in the near future, Singh clarified that product pricing in India was linked to global pricing of products. But if domestically cost of production was higher than international cost of production of the same products, then IOCL would not be able to pass on the benefit of lower international prices to consumers, Singh said.
The chairman said it will all depend on how IOCL can efficiently manage the supply chain from the source ( import of crude) , to refining to distribution and marketing of the petroleum products. We have to manage this efficiently, he said