Key Takeaways
- Indian Oil plans to invest Rs 1,086 crore in Terra Clean Ltd. to expand renewable energy capacity by 4.3 GW.
- In Q4 2023, Indian Oil reported a 50% profit increase to ₹7,265 crore, driven by inventory gains.
- The company entered a five-year LNG supply deal with Trafigura, valued around $1.3–$1.4 billion, to meet growing domestic demand.
Investment in Renewable Energy
Indian Oil Corporation has announced plans to make an equity investment of Rs 1,086 crore in its subsidiary, Terra Clean Ltd., to establish 4.3 GW of renewable energy capacity. This new investment is in addition to a previously announced Rs 1,304 crore equity investment aimed at developing 1 GW of renewable capacity.
Financial Performance
In its latest quarterly performance, Indian Oil reported a profit of ₹7,265 crore for Q4 2023, marking a significant 50% rise from the same period last year. This increase was attributed to inventory gains and an expansion in marketing margins. Revenue from operations during this quarter stood at ₹2,17,725 crore, compared to ₹2,19,876 crore recorded in Q4 2022. The gross refining margin (GRM) for the period was $7.85 per barrel, a decrease from $8.39 in the previous year.
Despite the rise in quarterly profits, Indian Oil’s financial results for the entire fiscal year 2024–25 indicate challenges, with a reported profit of ₹12,962 crore—67% lower than the ₹39,619 crore earned in the previous year. The average GRM for the year also dropped to $4.8 per barrel, significantly down from $12.05 the previous year. The board has declared a dividend of ₹3 per share.
Supply Strategies and Energy Demand
Regarding supply contingencies amid the volatile situation in Kashmir, Indian Oil Chairman Arvinder Singh Sahney stated, “We are always in a state of readiness.” The company has entered into a five-year agreement with global trader Trafigura to purchase 2.5 million tonnes of liquefied natural gas (LNG), valued at approximately $1.3–$1.4 billion. This contract, involving 27 cargoes based on Henry Hub pricing, is scheduled to begin in the latter half of this fiscal year and will help meet increasing domestic gas demand.
Additionally, Sahney addressed energy sourcing during a Q&A session, clarifying that there is “no mandate” from the government for specific sourcing from geographic regions. He also noted that the company is not currently engaged in negotiations with Russian firms for oil deals.
Looking ahead, Sahney anticipates that domestic demand for petrol will remain steady, with expectations for growth in diesel and jet fuel consumption. Last year saw increases in sales, with petrol up by about 7%, diesel at 2%, and jet fuel by 9%. Notably, Indian Oil achieved a significant milestone in 2024–25, as its sales volume surpassed 100 million metric tonnes for the first time in its history.
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