State-owned Indian Oil Corporation Ltd (IOC) on Monday reported a massive 98.6 per cent drop in net profit in the September quarter, as refinery margins fell and marketing margins shrunk.

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The company posted a standalone net profit of Rs 180.01 crore in the July-September period -- the second quarter of the current 2024-25 fiscal year -- compared with a profit of Rs 12,967.32 crore a year back, according to a stock exchange filing by the company.

The profit also declined sequentially, when compared to an earning of Rs 2,643.18 crore in the April-June period.

While refinery margins fell, the company also booked under-recoveries on selling domestic cooking gas LPG at government-controlled cost, which was lower than the cost.

For the six months ended September 30, IOC had an under-recovery on LPG of Rs 8,870.11 crore, the filing showed.

It earned USD 4.08 on turning crude oil into fuels like petrol and diesel as compared to gross refining margin of USD 13.12 per barrel last year.

Pre-tax earnings from downstream fuel retailing businesses slumped to just Rs 10.03 crore from Rs 17,7555.95 crore in July-September 2023.

Revenue from operations dropped to Rs 1.95 lakh crore in the July-September from Rs 2.02 lakh crore a year back as international oil prices softened.

Later in a statement, IOC said it sold 21.931 million tonnes of petroleum products during the second quarter as compared to 21.941 million tonnes a year back and 24.063 million tonnes in the April-June period.

Its refineries processed 16.738 million tonnes of crude oil, down from 17.772 million tonnes in July-September 2023 and 18.168 million tonnes in April-June 2024, it said.

The company and other state-owned fuel retailers -- Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) -- had last year made extraordinary gains from holding petrol and diesel prices despite a drop in cost.

The price freeze was justified in the name of recovering losses HPCL and the other two retailers had suffered in the previous year when they did not raise retail prices despite a surge in cost.

The gains arising from the price freeze were eroded with petrol and diesel prices being cut by Rs 2 per litre each just before general elections were announced. This together with a drop in product cracks or margins on relatively stable crude oil prices led to a fall in profits.

Cracks -- the difference between raw material crude oil and final product price -- have shrunk from the highs of 2022-23.