Indian Oil refineries likely to start operating at 100% capacity by July-end

• Indian Oil Chairman Sanjeev Singh added that fuel demand has increased to 90 percent presently from 45 percent in the first week of April

• He added that fuel demand is expected to reach pre-COVID levels by the end of the year

New Delhi: Indian Oil's refineries are likely to start operating at 100 percent capacity by July-end as fuel demand picks up, Director (Refineries) of Indian Oil SM Vaidya said at a press conference held to announce the financial results. Indian Oil Chairman Sanjeev Singh added that fuel demand has increased to 90 percent presently from 45 percent in the first week of April. He added that fuel demand is expected to reach pre-COVID levels by the end of the year. The rise in demand comes close on the heels of easing of lockdown restrictions across India, particularly in green and orange zones.

Fuel demand has recovered faster than expected

While noting that the demand for fuel has recovered faster than expected in the wake of easing of restrictions, Singh added that it may have been triggered by increased use of private vehicles in the absence of public transport. The demand for petrol is around 85-86 percent of what it was in June last year, while diesel is at 88-89 percent when compared to the corresponding period of the previous financial year, said the Indian Oil Chairman. "Going beyond 90 percent will take a little longer, especially for diesel. The onward recovery will depend on other sectors," said Singh.

The backdrop

In Q4 of FY2019-20, Indian Oil has registered a loss of Rs 5,185 crore on account of inventory losses incurred due to a decline in crude oil prices. The company has posted a net profit of Rs 6,099.27 crore in the corresponding quarter of the previous financial year. Indian Oil recorded an inventory loss of Rs 14,692 crore in the March quarter of FY2019-20 as compared to an inventory gain of Rs 1,787 crore in the same period a year back. The consolidated net loss for Q4 of FY2019-20 stood at Rs 7,782 crore.

The net profit for the year ended March 31 dropped 92.2 percent to settle at Rs 1,313 crore as compared to Rs 16,894 crore during the previous financial year, mainly on account of inventory losses and lower refining margins during the current year. Revenue from Operations was at Rs 5,66,950 crore for FY2019-20 as compared to Rs 6,05,932 crore in the financial year 2018-19. The Revenue from Operations of Indian Oil for Q4 was Rs 1,39,619 crore as compared to Rs 1,44,481 crore in the corresponding quarter of FY2018-19.

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