The largest of the three oil public sector units (PSUs), Indian Oil Corporation (IOC) has logged in a marginal 3% decline in FY02 topline. The profit of the company rose by a tame 6% during the year.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy)
Diluted Earnings per share*
The encouraging factor was that the operating expenses saw a sharper decline compared to sales, resulting in a 150 basis points improvement in operating margins to 5.5%. Consequently, operating profit saw a 34% growth in FY02. The weakening of the oil prices during a major portion of FY02 led to this improvement. Infact, purchase of products and crude costs saw a 6% decline YoY.
IOC managed to control other cost heads as well. Raw material expenses declined 10% YoY. Infact raw material expenses as a percentage of sales declined from 27.6% in FY01 to 25.6% in FY02. The VRS initiated by the company already seems to be showing results, as staff cost of the company declined by 16% YoY.
Purchase of products & crude for resale
Unlike last year, interest cost of the company declined. This could be on account of settlement of pool claims for earlier years, consequently releasing company's funds in the oil pool account. The company's net profits would have been significantly higher but for deferred taxes. The company's tax provision shot up to Rs 17 bn, thereby reducing profit growth considerably.
At Rs 201 the company is trading on a multiple of 5.4x FY02 earnings.
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