Indian Oil Corporation (IOC), the nation's largest oil firm, on Saturday reported a marginal rise in net profit in the second quarter of the current fiscal as lower inventory gains offset better operational performance.

Net profit of Rs 6,360.05 crore, or Rs 6.93 a share, in July-September compared with Rs 6,227.31 crore, or Rs 6.78 per share, in the same period a year back, according to the company's filing to the stock exchanges. Sequentially, net profit was higher than Rs 5,941.37 crore earned in the April-June quarter.

Officials said the flattish net profit was largely due to lower inventory gains in the second quarter.

In Q2 last year, the company had large inventory gains but this year they were lower, they said. Inventory gain arises when a company buys raw material (crude oil in case of IOC) at a particular price but by the time it is able to process it into finished products (petrol, diesel etc), rates have gone up. Since retail rates are benchmarked at prevailing international prices, an inventory gain is booked. Inventory loss is booked when the reverse happens.

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IOC said it sold almost 19 million tonnes of fuel in July-September, up from 17.7 million tonnes last year. With demand returning with a bounceback in the economy, refineries turned 15.27 million tonnes of crude oil into fuel in Q2, higher than 13.96 million tonnes last year.

Revenue rose 46 percent to Rs 1.69 lakh crore as international oil prices rose to multi-year highs. Better operational performance was also offset by higher expenses, which jumped by almost 50 percent in July-September.

IOC further said its board approved an interim dividend of 50 percent (Rs 5 per equity share) for the year 2021-22. For the first half of current fiscal, net profit soared 51 percent to Rs 12,301.42 crore. Revenue was up at Rs 3.24 lakh crore in April-September from Rs 2.04 lakh crore a year back.

The firm earned $6.57 on turning every barrel of crude oil into fuel during April-September.

"The core gross refining margin (GRM) or the current price GRM for the period April-September 2021 after offsetting inventory loss/gain comes to USD 3.47 per barrel," it said.

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IOC's operations that include selling fuel such as petrol, diesel and LPG and petchem, were "considerably affected" last year after mobility restrictions imposed to curb the spread of COVID-19 dented demand.

"However, since then, the impact has significantly reduced as is evident from the physical performance during April-September 2021," IOC said.