Indian Oil Corporation or IOC reported a massive Rs.5185 crore loss in the Mar-20 quarter as the sharp slump in oil prices resulted in record inventory losses. The inventory losses are a translation loss wherein the stocks of crude oil and refined oil are valued at the current market price and any depreciation is written off in the quarter.

IOCL recorded inventory losses of Rs.14,692 crore in the Mar-20 quarter compared to an inventory gain of Rs.1787 crore last year. Apart from the inventory losses, the company also suffered due to a severe fall in the gross refining margins or GRMs. The GRMs were actually negative for IOCL at $2.15/bbl for the Mar-20 quarter hitting profits in a big way.

However, IOCL is optimistic of the future. Fuel demand had evaporated by 70% following the COVID-19 lockdown grounding most land and air transport to a halt. However, this is back to 85% of the normal capacity and is likely to reach 90% by end of July. Despite higher prices of petrol and diesel, demand has picked up smartly in the last few weeks.