India's largest fuel retailer, IndianOil (IOC), managed a net profit of Rs 10,220 crore (Rs 2,949) in its golden jubilee year 2009-10 despite absorbing a loss of over Rs 3,000 crore from selling subsidised fuel. The same year, it also moved up 11 places to 105 in the Fortune Global 500 list. The company was expecting some policy support from the government to further improve its performance in the current financial year. On June 7, it was expecting the empowered group of ministers to deregulate fuel prices and draw a transparent subsidy sharing mechanism. However, the group's meeting remained inconclusive but the company is still hopeful. In an interview with ET, IOC chairman B M Bansal says that such crucial decisions that affect millions of citizens are not taken in haste. Excerpts:
Was EGoM indecision on fuel price hike disappointing?
I'm not disappointed that EGoM couldn't take a decision on fuel price hike. I understand it's a sensitive matter. Such issues are not easy to decide in the first meeting itself. The government is aware that oil PSUs (public sector undertakings) are incurring losses on retail sale of petrol, diesel, PDS kerosene and LPG (cooking gas). They constitute over 60% of our total sales. The government also understands impact of a price hike. It has to strike a balance. Such issues may take several rounds of discussions, if required. I'm positive that the government will soon resolve this matter and it will be an amicable solution for all parties involved including customers.
Despite absorbing a loss of over Rs 3,000 crore in 2009-10, IOC made over Rs 10,000 crore net profit. About 247% jump over 2008-09. How?
Due to global crude oil price fluctuation we made significant inventory gains. Besides, we improved our performance in all counts. A cash compensation from the government for our losses on selling fuel below cost was also a major relief. Though we had to absorb some of the subsidy burden.
Will your projects, which were put on the back burner due to shortage of funds, be revived?
We'll shortly be reviewing all such projects that have been put on hold. Yes, we have better cash reserves. But future (of financial performance) is still uncertain pending a policy decision by the government (on fuel pricing issues). It will be too early to name projects that will be revived.
What will be your focus in future?
The focus will still remain on core areas, which is a priority. Areas such as de-bottling (plant capacities), efficiency in production, quality control, safety and other operational requirements will get a lot more attention. In the non-core areas, E&P (exploration and production) will get the top most priority.
Your plans include venturing into nuclear power generation.
Yes. Nuclear power generation plans are on. We will soon sign a joint venture agreement with NPCIL and decide the site. In the joint venture we'll pick up an equity in the range of 26-49%. Other companies may join us depending on synergy and regulatory norms.
IOC is an oil marketing company. How do you explain nuclear venture?
Nuclear power is part of our new vision to become an integrated energy company of India. We will explore every segment of energy sector. We are interested in nuclear power generation as it is relatively less polluting. We are also interested in green power such as solar and wind power and other clean energy sources.