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Our Bureau

Mumbai , Aug. 22

INDIAN Oil Corporation Ltd, which became the first Indian company to cross a turnover of Rs 1,50,000 crore in 2004-05, has posted cash loss for the first time. IOC has returned a cash loss of Rs 400 crore in July, and subsidiary IBP Co Ltd's loss was Rs 187 crore. August is shaping no better, Mr Sarthak Behuria, Chairman, IOC, said here on Monday.

Talking to the media here, Mr Behuria said there had to be an equitable sharing of losses by the three constituents - oil companies, the Government and customers. The product price increase could be to the tune of Rs 2-3 a litre for diesel and petrol, and there should also be modest price hikes in LPG and kerosene. Revenue loss to IOC on account of under recovery was some Rs 6,000 crore for kerosene and Rs 3,000 crore for LPG, he said.

"Kerosene is sold at Rs 9 a litre, less than the price of mineral water. The under recovery here is to the tune of Rs 11-12 a litre. On the sale of LPG, we are losing Rs 90-100 a cylinder. The Cabinet has to take a call. We have mooted a combination of reduction in excise duty plus an upward revision in petroleum prices," said Mr Behuria who was in the city to launch a range of marine engine oils under the Servo brand.

There was always the option of monetising IOC's 9.6 per cent stake in ONGC, he said. "It is like money in the bank. At today's price, we can get Rs 13,000 crore. We need the Cabinet nod. Then we will decide when to sell the stake, at what price," Mr Behuria said.

However, this would be a one-off income and the company needed to target its expansion projects based on regular cash flow, he said. Thus, capital expenditure beyond two years would have to come under review, though the ongoing Rs 7,500 crore investment would be uninterrupted, he said. The company's borrowings, that stood at Rs 17,500 crore in March 2005, had already breached Rs 19,000 crore, he added.

Mr N.G. Kannan, Director, Marketing, IOC, told journalists that the oil major was losing not less than Rs 1,500 crore a month in revenues due to under realisation. The oil industry revenue loss was anything between Rs 42,000 crore and Rs 45,000 crore a year, he said, adding that if unchecked, this could head towards Rs 60,000 crore next year.

Thus, doomsday predictions of domestic oil PSUs going bankrupt may well come true, if the Government were to persist with its petroleum pricing policy. As per reports, IBP could go broke in October, followed by BPCL in 12 months, HPCL in 18 months and IOC in 35 months.

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