Lanka IOC PLC (LIOC), the local unit of the Fortune 500, Indian Oil Corporation Limited saw its net profits for the three months ended June 30,2013 soaring as much as 600 percent Year-on-Year (YoY) to Rs.1.35 billion due to cost controls.

The company achieved this excellent profit despite the revenue remaining almost flat at Rs.18.47 billion from the corresponding period last year. The Earnings per Share rose to 253 cents from 36 cents.

Both direct costs and overheads declined during the quarter, demonstrating the concerted effort by the company to keep costs under control.

The cost of sales declined by as much as 8 percent YoY to Rs. 16 billion improving the gross profit margin to 13 percent by end June from 6.8 percent.

Both distribution and administration costs declined by 10 percent YoY to Rs.608.2 million.

 The cost to revenue ratio improved to 3.3 percent from 3.6 percent from a year ago, demonstrating an increase in cost efficiency.

The narrowing of the costs resulted in an operating profit of Rs.1.8 billion, an increase of 200 percent from a year ago. The operating margin improved from 3.2 percent to 9.7 percent.

Meanwhile the company received an additional finance income of Rs. 11.5 million during the quarter over the same period last year.

Finance cost decreased 43 percent YoY to Rs. 251.6 million, increasing the interest cover to 7 times from 1.4 times.

The well-experienced downstream petroleum products operator recently aggressively penetrated into the Sri Lankan lubricant market through the ‘Servo’ brand. The company expects to carry out total blending of lubricant products in their blending plant in Trincomalee.

“Based on the vast gap between the first and the second player, I see a huge potential in capturing the market share,” LIOC Managing Director, Subodh Dakwale told Mirror Business in a recent interview..

LIOC’s Servo has 11.2 percent market share next to Chevron which has a share of 57 percent.

LIOC holds one third stake in Ceylon Petroleum Storage Terminals Ltd, the common user facility in Sri Lanka for storage and distribution of petroleum products. (DK)