NEW DELHI: IndianOil subsidiary IBP Ltd on Wednesday paid for the government's populism by reporting a 73 percent drop in net profit in 2004-05 after losing Rs 563 crore on selling petrol, diesel, cooking gas and kerosene at prices lower than procurement costs.
Government has not allowed oil marketing companies to raise retail prices despite a manifold increase in the cost of crude as well as refined products in the international market. Since even domestic refineries are entitled to get import parity price, IBP — which is a purely marketing company and does not have a refinery — is buying the products at a higher cost but selling at artificially capped lower price.

Net profit fell to Rs 58.87 crore in 2004-05 fiscal from Rs 214.66 crore in 2003-04. The company was saved by better marketing margins in the Q4 of the fiscal. It had posted a net loss of Rs 167.55 crore in first nine months of the 2004-05 fiscal but profit vaulted 142 percent to Rs 226.42 crore in the fourth quarter.

"We got Rs 2.45 per litre marketing margin on petrol and Rs 2.20 per litre on diesel in the April-March quarter. In comparison, we had only Rs 1.36 per litre margin on petrol and Rs 0.88 per litre on diesel in April-December," chairman Sarthak Behuria said.