OIL BIGGIE MAY POST RS 233-CR LOSS FOR FY09

IOC BRACES FOR 1st RED MARK IN 50 YRS

Rajeev Jayaswal NEW DELHI

    INDIAN Oil (IOC), the country’s largest company by sales, could report its first-ever annual loss in its 50-year history next month, as a result of selling fuels below cost at a time when global oil prices hit a record high.
    State-owned IOC, a Fortune 500 company that posted revenues of $62 billion in 2007-08, could report a loss of Rs 233 crore for the year to March-end 2009, according to information provided by the company to its board and approved by its directors last month.
    However, IOC expects to swing back into the black during the current financial year. It is expecting a net profit of Rs 5,452 crore, according to its budget estimates for the year ending March 31, 2010, which was also approved by its board.
    The company reported a net loss of Rs 3,673 crore for the nine months to December-end 2008, compared with a profit of Rs 7,377 crore in the corresponding year-ago period. It posted a net profit of Rs 6,963 crore in 2007-08.
    The company declined to comment, but officials said the 2008-09 numbers were just estimates and could change when annual results are announced towards the end of May.
    A senior petroleum ministry official said the government would take all necessary measures to ensure that public sector oil companies close the financial year in profit.
    The official said these state-owned companies had to bear the brunt of the unprecedented volatility in global crude oil prices last year “to protect the common man”. Now, the government would ensure that they don’t suffer for no fault of theirs, said the official, who asked not to be named.
    IOC and other state-owned oil refiners, which are forced to sell fuel at government-determined rates, were hit hard last year, as their prices could not keep pace with the steep rise in international crude oil prices, which hit a record high of near $150 a barrel last July. Prices have since fallen sharply, as demand for oil fell in the wake of global recession.
    Indian Oil, which has 49% market share, informed its board that its net “under-realisation” from selling petrol, diesel, kerosene and cooking gas below cost in 2008-09 could be Rs 7,497 crore even after considering benefits of getting cheaper crude from state-owned oil producers and government compensation in the form of oil bonds. The estimated under-realisation for 2009-10 is Rs 5,419 crore.
    IOC expects an average gross refining margin (GRM) of $4.34 a barrel in 2008-09, nearly half of what it got the previous year, based on the actual performance for the first three quarters and projections for the last quarter. Its GRM of $9.02 a barrel in 2007-08 was its highest ever. For 2009-10, the company has pencilled in a margin of $4.88 a barrel.
    rajeev.jayaswal@timesgroup.com 

 

 

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