IndianOil quarterly loss at Rs 7485cr
Kolkata   10-Nov-2011

IndianOil on November 9, 2011 registered its biggest ever quarterly loss of Rs 7,485.55 crore and warned of supply disruptions as increased borrowing could lead to a shutdown of some refineries. Within days of increasing petrol prices, the company on November 9, 2011 announced this massive second quarter loss as it did not receive any cash subsidy from the government. The company had posted a profit of Rs 5,293.95 crore in the corresponding quarter last year. “It is getting increasingly difficult for us to borrow, we may have to shut down our refineries,” IOC chairman R. S. Butola said. Oil ministry officials said the government would come to the aid of oil firms to prevent any supply disruptions. The petrol price hike was opposed by the Trinamul Congress. However, there is no clear picture on a rollback. “All depends on the prevailing international product pricing, which started moving up again after falling over the past few days. However, rupee depreciation is the most worrying aspect. It is very difficult to say now what we would do next week,” Butola said.

The rupee depreciated 70 paise to 50.17 to a dollar on November 9, 2011. The under-recoveries of oil firms increased about Rs 8,000 crore annually on account of every rupee depreciation.

“If we were not to resort to price hikes, we would suggest you (the government) to please provide compensation for selling petrol at prices lower than cost,” Butola said.

IOC and other fuel retailers have lost Rs 2,486 crore on petrol this fiscal as rupee depreciation made crude oil imports costlier.

The company’s borrowings at the end of September stood at Rs 73,296 crore, up by Rs 21,000 crore from March.

“If the present situation continues, by December the company will find it difficult to source crude, resulting in a drop in output, which would also affect supplies,” he said.

“The quarter has been the worst for the company. Never before have we witnessed this kind of quarterly losses. They are mainly on account of increase in unmet under-recoveries and rise in interest expenditure because of rupee depreciation,” he said.

IOC, which is also the country’s biggest refiner with a total capacity of 1.294 million barrels per day, declined to provide gross refining margins for the quarter but said they were likely to be negative. It had posted margins of $6.63 a barrel in the same quarter last year.

The firm said rising under-recoveries on sale of petroleum products at subsidised rates might force it to cut its capital expenditure plan for this fiscal and impact its ability to import crude oil.

Shares of IOC fell 4 per cent to Rs 288 on the BSE on November 9, 2011, while on the NSE, the stock ended 4.04 per cent lower at Rs 287.20.