IOC losses swell to Rs. 3,719 cr
New Delhi   11-Aug-2011

Despite higher refining margins in the first quarter of this fiscal, state-owned IndianOil on Wednesday reported a 9% rise in net losses at R3,718.7 crore, mainly on account of selling diesel, LPG and kerosene below cost.

IOC chairman RS Butola told reporters here that the company has suffered a net under-realisation of R7,673 crore in the June quarter, compared with an under-recovery of R7,343 crore in the same period a year ago. This is after upstream companies ONGC, Oil India and Gail India giving R7,932 crore as their share of oil subsidy and the government agreeing to give a support of R8,201 crore as budget support for selling fuel at state-set prices, he said. Butola said that only a significant reduction in global crude price would warrant a cut in the retail price of petrol. “We are monitoring the price situation. If there is a further significant reduction in global crude oil price, then there could be a cause for a review of our price (of petrol),” Butola said.

IOC’s gross sales jumped 28% in the first quarter to R99,757 crore and net sales jumped 29% to R92,100 crore. Gross refining margins, the profits from refining operations of the refinery cum retailer, improved to $4.71 a barrel in the first quarter of this fiscal from $3 barrel the same time a year ago.

Due to cash flow problems arising out of loss making retail operations, the country's largest oil company's interest payments almost doubled to R1,038 crore in the first quarter, compared with R571 crore in the same time a year ago.

IOC also had to tackle an inventory loss of R900 crore as the company had to pay customs duty on the crude already purchased but was unable to recover it from the consumer as the government cut the customs duty on finished products in June. The import parity price of finished products that includes customs duty is used to calculate the under-recovery on the sale of these products and hence the subsidy element on them too comes down with the duty reduction.

IOC director (finance) PK Goyal said the company's borrowing has gone up by about R15,000 crore in the first quarter to R67,458 crore. Butola said IOC refined 19.259 million tonnes of petroleum products, including for exports, in the June quarter.