Oil India Ltd (OIL) reported an 81% drop in net profit during the second quarter, due to a one-time provisioning for tax liability. The company’s standalone net profit fell to Rs 325.31 crore from Rs 1,720.53 crore in the same period last year. This provision was made towards a disputed GST liability of Rs 2,655.57 crore, stemming from a service tax demand from March 2016 to June 2017. The demand was for tax on royalty paid on crude oil and natural gas to state governments.
Despite the company’s dispute of this tax demand and its move to the Gauhati High Court, it decided to provision for these disputed taxes for prudence and conservative principles. This includes interest amounting to Rs 2,655.57 crore from March 2016 to September 30, 2023.
While the EBITDA rose to Rs 3,197.74 crore in the quarter under review, up from Rs 2,743.03 crore a year back, the turnover also rose to Rs 5,913.31 crore compared to Rs 5,772.88 crore a year ago.
On the production front, oil production increased 5.6% to 0.835 million tonnes, but gas production fell to 0.81 billion cubic meters from 0.823 bcm last year.
Despite these mixed results, the company remains strong and is working on resolving these tax disputes to continue operating at its full potential.