IOC says finances so bad, it may have to shut units
Pune   10-Nov-2011

Despite raising the price of petrol 13 times in the past one year, the financial situation of IndianOil (IOC), the country’s largest oil marketing company, is so bad it may have to shut down some of refineries with no money to import crude.

“Our debt-equity ratio is 1.66. We have a debt of Rs73,000 crore in our books. If the situation does not improve, we may not be left with money to import crude from the international market and we will have to shut some of our refineries,” said RS Butola, chairman and managing director, IndianOil.

The company on Wednesday announced its worst quarterly result with a net loss of Rs7,485.55 crore for the quarter ended September 30 due to mounting losses on fuel sales.

The loss for the second quarter is in sharp contrast to a profit of Rs5,294 crore notched up in the same quarter of the previous year.

“The loss is mainly on account of an increase in unmet under-recoveries and increase in interest expenditure,” said IOC in a statement.

The public sector undertaking has not been given any compensation in the current fiscal by the finance ministry for the huge under-recoveries that it suffers by selling fuel at loss.

“The finance ministry needs to pay us Rs23,000 crore as compensation for the first two quarters, but we have not heard anything from them till now,” said Butola.

But an official with the petroleum ministry told DNA:“I don’t think the finance ministry will let this happen. Something will come through for sure.”

IOC had capital expenditure plans of Rs14,800 crore for the fiscal. “We will review this by end-December or by the first week of January, and if our borrowing continues to remain high, we will cut the capex plan,” said P K Goyal, director, finance, IndianOil.