Indian Oil’s June-quarter net profit fell 47 per cent to Rs 3,737.50 crore from Rs 7,092.42 crore a year ago because of a drop in refinery margins and inventory gains.

“The variation is majorly on account of lower inventory gain during the quarter,” the company said.

IOC, the nation’s biggest oil firm, recorded an inventory gain of Rs 2,362 crore as opposed to Rs 7,065-crore gain in the April-June 2018 period.

Inventory gain accrues when a company buys raw material (crude in case of IOC) at a given price but by the time it is able to process and convert it into consumable products (fuel in case of IOC), prices have moved up. And, since the final product is sold at a prevailing market price, the company books an inventory gain. Inventory loss occurs when the reverse happens.

Revenue was almost flat at Rs 1.53 lakh crore in the first quarter of 2019-20. The company earned $4.69 on turning every barrel of crude oil into fuel in April-June, down from $10.21 per barrel average gross refining margin (GRM) in the corresponding quarter of the previous financial year.

“GRM excluding inventory gain/loss and price lag is $2.27 per barrel compared with $5.18 a barrel in 2018-19,” the statement said.

IOC said it had a foreign exchange (forex) gain of Rs 91.75 crore in the first quarter compared with Rs 1,804.85 crore forex loss in the previous year.

IOC chairman Sanjiv Singh said the company sold 22.66 million tonnes of products, including for exports, during the first quarter.

IOC’s refineries processed 17.28 million tonnes of crude oil and its pipelines transported 21.85 million tonnes of oil during the quarter. The company got Rs 656 crore subsidy support for kerosene sold through PDS and Rs 3,997 crore for cooking gas (LPG).