The Hindu Business Line : IOC's borrowings shoot up 48 pc

INDIAN Oil Corporation (IOC) is likely to take a dent on its second quarter profits, largely due to non-revision of retail petroleum product prices in the wake of hardening crude prices and the shutdown of the 2-million tonne Mathura refinery.

According to company sources, the situation is accentuated by the fact that the LPG-kerosene subsidy-sharing scheme is the same as that implemented during Q1, even though crude prices have risen by around $8 a barrel during the period.

According to the IOC Chairman, Mr M.S. Ramachandran, the company's borrowings have shot up 48 per cent this fiscal. "Our total debt has risen from Rs 10,800 crore as on March 31, 2004 to Rs 16,000 crore currently. We borrowed about Rs 5,200 crore in first six months," Mr Ramachandran told reporters here.

In this backdrop, Mr Ramachandran is expected to meet the Petroleum Secretary on Wednesday to discuss the adverse financial performance of the company.

He said the company's borrowings increased during the period because the company was not able to realise full prices of petrol, diesel, domestic cooking gas (LPG) and kerosene despite the raw material prices rising by 30 per cent. The Indian basket of crude oil, which had averaged $27.98 per barrel in 2003-04, increased to $34.17 a barrel in April-June and to $38.66 in July- September.

Domestic petrol and diesel prices have not been raised since August 1 and currently diesel is being sold at over Rs 3 per litre less than the international price.

Similarly, petrol is being sold at Rs 0.4-0.5 a litre lower. In case of LPG, the State-run firms were losing Rs 130 per cylinder while that on kerosene, the loss was Rs 6.96 a litre. In case of petrol and diesel, IOC had lost Rs 948 crore, while the loss was around Rs 3,630 crore on LPG and kerosene during the first six months of current fiscal, he said.