IOC sees 30% drop in net on higher subsidy
New Delhi   31-May-2011

IndianOil (IOC) reported 29.77 per cent dip in its fourth quarter of 2010-11 profit at Rs 3,905.16 crore against Rs 5,556.77 crore in the same period previous year. In the complete financial year 2010-11, IOC's net profit came down to Rs 7,445.48 crore from Rs 10,220.55 crore in the previous year.

There could be another hike of Rs 1.35 per litre in petrol price shortly, the company indicated on Monday.

“While it is imperative to increase the price of motor spirit (petrol), we are mindful of the fact the market would take time to absorb the recent rise in price. We are reviewing the situation every day and are waiting for the right opportunity. We will have to make it (price rise) acceptable,” IOC chairman RS Butola said. “The desired price increase in petrol is Rs 1.35 per litre,” Butola added.

IOC is losing Rs 4.58 while selling every litre of petrol even after a steep increase of Rs 5 per litre on May 15. IOC turned red due to absorbing Rs 3,803 crore of losses incurred on selling fuel, kerosene, cooking gas and diesel, below market cost. The company suffered a loss of Rs 39,309 crore in 2010-11.

The non-clarity in subsidy sharing and delay of releasing cash by government has forced IOC to borrow as high as Rs 67,800 crore. “In the past 45-50 days, our borrowings have risen by Rs 15,000 crore. Every month we have a shortfall of nearly Rs 8,000 crore. Out of which we borrow Rs 5,000-6,000 crore. We are borrowing from both overseas and domestic market,” Butola said.

The higher borrowings have lead IOC to incur a loss of Rs 1,500 crore on account of additional interest pay out, he added.