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Informist, Friday, May. 2, 2025

By Narayana Krishna and Ashutosh Pati

HYDERABAD/MUMBAI – Public-sector oil refining and marketing giant Indian Oil Corp. Ltd. expects the share of Russian crude in its imports during the financial year 2025-26 (Apr-Mar) to rise to 24-25% from 22% in FY25, the management said in a post-earnings conference call Friday.

In the March quarter, the share of crude oil imports from Russia fell to 14%, the company said. According to reports, the availability of Russian crude fell significantly in Jan-Mar because of an increase in demand from Syria. Indian oil-marketing companies procuring crude from Russia at a discounted price to improve their margins.

The IOC management said that in the current quarter, the availability of Russian crude oil has increased and imports from the region may rise. However, it said the company is not specifically targeting any region to procure crude oil, and goes by quality, availability, and price to buy in the international market.

The management said IOC's FY26 gross refining margin is expected to be "pretty good". For FY25, the company reported the average gross refining margin at $4.80 per barrel. In the March quarter, the company's gross refining margin was $7.85 per barrel.

For Jan-Mar, IOC reported a net profit of INR 72.65 billion on a revenue of INR 2.18 trillion. The company's management expects FY26 to be margin-positive across all its business segments. While the refining and marketing margins are expected to be good, the margin of the petrochemicals business may see some stress from cyclical factors, it said.

LPG UNDER-RECOVERY
The IOC management said the company is engaging with the government to get compensation for under-recovery in the liquefied petroleum gas business. Under-recovery refers to the financial loss incurred by oil-marketing companies when they sell a product at a subsidised price below the actual cost, including import, refining, and distribution costs. The company said LPG under-recovery in Jan-Mar was INR 170 per cylinder. 

"We are hopeful that our continuous engagement with the government will give positive results," the management said. "The time and quantum is not known, but it depends upon many factors, geopolitical factors, other things, which keep affecting the oil-marketing companies."

CAPACITY EXPANSION
IOC has planned capital expenditure of INR 334.94 billion for FY26, against INR 375.57 billion in FY25. The management said most of this expenditure will be on capacity expansion plans, while a portion may go towards maintenance. The company is adding capacity of nearly 18 million tonnes per annum over the next few years. The expansion of the company's refinery at Panipat in Haryana will be completed by Jan-Mar. The refinery project at Barauni, Bihar, is expected to be ready in the first half of FY27.

Of the total capital expenditure, the company also expects to spend INR 70 billion to INR 80 billion on marketing, INR 30 billion on petrochemicals, and INR 5 billion on the city gas distribution business, the management said.

IOC plans to expand its retail network by adding 3,000-4,000 outlets in FY26. As of Mar. 31, the company had 40,221 retail outlets across the country. On Friday, shares of Indian Oil Corp. closed nearly 4% higher at INR 143.28 on the National Stock Exchange.  End

US$1 = INR 84.58

Edited by Rajeev Pai

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