BW Communities

IOC Posts Q2 Net Loss, May Cut Capex Plan

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Indian Oil Corp, the country's biggest fuel retailer, swung to a quarterly loss and warned rising under-recoveries on sale of petroleum products at subsidised rates may force it to cut its capital expenditure plan for this fiscal year and impact its ability to import crude oil. The state-run firm posted a net loss of Rs 7,486 crore ($1.5 billion) in its fiscal second quarter ended September, much wider than anticipated, and said it would find it difficult to borrow funds beyond December. "We will review our capex plans in end-December or the first week of January, and if our borrowing continues to remain high, we will cut our capex plan," Finance Director P. K. Goyal told reporters. The company had planned capital expenditure of Rs 14,800 crore this fiscal year. India freed gasoline prices in June 2010, but prices for diesel, cooking gas and kerosene, which account for three-fourths of all petroleum products used in the country, are still regulated, forcing state-run oil firms to sell at losses. The costs of these price caps have climbed as international oil prices have risen. New Delhi aims to loosen control of fuel prices, but has found this difficult with benchmark global crude prices staying well above $100 a barrel most of this year. At 1034 GMT, Brent crude traded at $114.50, and has risen nearly 6 percent in November alone. India's state-run fuel retailers IOC, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd last week raised petrol prices by about 2.7 per cent, their fourth increase in prices this year. The government has drawn criticism for allowing the price increase despite stubbornly high inflation in Asia's third-largest economy. India's food inflation accelerated to a nine-month high of 12.21 per cent in late October. Indian state-run oil companies are expected to rack up revenue losses of $26.4 billion in the fiscal year ending March 2012, India's oil minister S. Jaipal Reddy had said last week. Q2 Loss Worse Than Expected IOC, which controls nearly half the market for petroleum products in India, said the September quarter was hit by increase in under-recoveries and rising interest expenditure. It had posted net profit of Rs 5294 crore a year earlier. Net sales at the company rose 28 per cent to Rs 88,725 crore. A Reuters poll of brokerages had estimated quarterly net loss of Rs 283 crore on net sales of Rs 98,677 crore. The company absorbed revenue losses of Rs 7,837 crore in the quarter on account of subsidised sale of fuel. Interest costs nearly tripled to Rs 1,484 crore. It had borrowings of Rs 73,296 crore at end-September, and it had a debt equity ratio of 1.66 times, Chairman R.S. Butola said. IOC, which is also India's biggest refiner with a total capacity of 1.294 million barrels per day, declined to give 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. Shares in IOC closed down 3.8 per cent at Rs 287.90 in a weak Mumbai market. The stock, valued by the market at $14.8 billion, has declined nearly 16 per cent so far in 2011, slightly worse than the 15.3 per cent fall in the main stock index. (Reuters)