Oil India's Q2 net profit drops 81% on tax provisioning

New Delhi, State-owned Oil India Ltd's second quarter net profit dropped 81 per cent on a one-time provisioning for tax liability. The company posted a standalone net profit of Rs 325.31 crore in the July-September period as against Rs 1,720.53 crore in the year-ago period, the company said in a stock exchange filing.

Oil India Ltd (OIL), the nation's second biggest state-owned explorer and producer of oil and natural gas, made a provision of Rs 2,655.57 crore towards a disputed GST liability.

Service tax demand was raised on the company for the period of March 2016 to June 2017, seeking tax on royalty it paid on crude oil and natural gas to state governments.

The company has disputed the tax demand and has moved the Gauhati High Court. The court granted a stay on the GST on royalty payments until further orders.

"However, considering the substantial time lapsed and on the ground of prudence and conservative principle as well as uncertainty involved, the company has made a provision of these disputed taxes, including interest amounting to Rs 2,655.57 crore (From March 2016 till September 30, 2023)," the filing said.

EBITDA rose to Rs 3,197.74 crore in the quarter under review from Rs 2,743.03 crore a year back.

The turnover rose to Rs 5,913.31 crore as opposed to Rs 5,772.88 crore a year ago.

The company got USD 86.86 for every barrel of crude oil it produced in the second quarter of the current fiscal as compared to a realisation of USD 100.59 per barrel.

Net oil realisation stood at USD 75.49 per barrel after paying for windfall profit tax.

Oil production was up 5.6 per cent to 0.835 million tonnes while gas production fell to 0.81 billion cubic metres from 0.823 bcm last year.