IOC posts Rs. 3,719cr Q1 loss on subsidy & borrowings
New Delhi   11-Aug-2011

State-run IndianOil has reported Rs. 3,719 crore net loss in the first quarter of current financial year because of huge revenue losses on selling diesel, kerosene and cooking gas below market rates and rising borrowings. "Major reasons for the loss are unmet revenue loss and high borrowing cost,” IOC chairman RS Butola told reporters. The company had posted a net loss of Rs. 3,388 crore in the same quarter previous year.

Butola said the global crude oil prices were still quite high and the company was not in a position to reduce petrol prices as it was still incurring a loss of Rs. 0.85 a litre on petrol sold in New Delhi. “In fact, international crude oil prices fell only one day on August 4 by $6 (a barrel) then bounced back to $106. We are not considering to reduce prices of petrol at this moment,” Butola said.

State-run oil marketing firms are free to fix retail prices of petrol as per market fluctuation and they consider price adjustments fortnightly.
He said that rising borrowing cost is also a major drag on company’s balance sheet. It had to pay Rs. 467 crore more in the quarter on account of higher interest on its borrowings. IOC director-finance PK Goyal said the borrowing had soared up to Rs. 67,458 crore from Rs. 52,794 crore in March 31. Butola said IOC refined 19.259 million tonnes of petroleum products, including for exports, in Q1.

The main reason for rising debt is delay in getting compensation from the government for selling fuel at controlled rates, he said. “We have been pleading with the government that compensation should be paid on a monthly basis.”