IOC posts record 7,485 cr loss in Q2
Ahmedabad   10-Nov-2011

Flagship refiner-marketer IndianOil on Wednesday posted a loss of over Rs 7,485 crore in the July-September period, the highest-ever quarterly loss reported by a listed company in the country, against a profit of Rs 5,294 crore in the same period of the last financial year. The latest numbers come within six days of the staterun company raising petrol price by Rs 1.80 a litre and beats its own record of posting such a huge loss in a quarter with a Rs 7,038 crore loss in the second quarter of 2008-09.

The country’s biggest fuel retailer has cut such a sorry figure financially since it did not raise petrol price as frequently as was required. It also continued to sell other fuels at artificially low prices under government orders even in the face of rising crude and falling value of the rupee. “This has been an unusual year that witnessed significant price upheaval and rupee depreciation... Never before have we witnessed this kind of quarterly losses,” company chairman Ranbir Singh Butola told reporters.

The government compounded its woes by failing to give the subsidy it promised for keeping diesel, cooking gas and kerosene price in check. The government controls the price of these fuels and the company is free to set price of petrol in line with international crude. The absence of timely handout on the fuels under government control has also left the company nursing a loss of Rs 11,204 crore in the six-month period of the ongoing financial year. In contrast, the company had made a profit of Rs 1,906 crore in the previous corresponding period.

Indeed, much of the blame for the company’s woes lie with the government. The company has an unpaid subsidy bill of Rs 7,837 crore on diesel and kitchen fuels for the quarter under review. The figure is pegged at Rs 15,509 crore for the six-month period since April. Clearly, the company that once stood guarantee for the sovereign, could have avoided the financial mess had this money been released on time.

No wonder, Butola said IndianOil was running on borrowed money and was reaching the end of the line, with banks becoming wary of further lending in view of the piling debt, which has touched Rs 73,296 crore and debt-equity ratio risen to 1.66:1 from 0.95:1 as on March 31. “At this rate, no bank will be willing to lend us beyond December. We will not be able to pay for crude oil we import and thus we will have to shut some refineries which would result in disruption of fuel supplies.”

After oil minister S Jaipal Reddy’s meeting with finance minister Pranab Mukherjee on November 2, petroleum secretary G C Chaturvedi said his ministry had asked for a Rs 29,000 crore cash subsidy in the first quarter (for all the three state-run oil marketrs) but given only Rs 15,000 crore. “We continue to seek the Rs 14,000 crore unmet demand of the first quarter. Together with Rs 14,250 crore of Q2, our demand is for Rs 28,000 crore for the first half of the current fiscal,” Chaturvedi said. After the last increase in petrol price, Butola told TOI that IndianOil had already lost Rs 1,200 crore on petrol this year, “which will not be compensated by the government. The dollar was pegged at Rs 46.29 the last time petrol price was raised by Rs 3 a litre in September. The exchange rate too has risen to Rs 49.”