The Hindu Business Line : IOC expects to maintain net at last year's level

The roadmap
IndianOil, inclusive of IBP Co Ltd, expects bonds worth Rs 6,700 crore.
The company would sell part of its oil bonds to repay its debts and settle taxes.
Rs 7,000-crore expenditure planned in the next fiscal on naphtha cracker plants and refinery expansion.

New Delhi , March 7

Helped by the Government bonds, subsidy sharing by upstream oil companies, dividend income and partial sale of its stake in GAIL (India) Ltd, Indian Oil Corporation Ltd (IndianOil) expects to maintain its net profit at the same level as last year.

Out of the Rs 11,500-crore oil bonds to be issued by the Government to partly compensate the oil marketing companies for their losses, IndianOil, inclusive of IBP Co Ltd, expects bonds worth Rs 6,700 crore (Rs 6,300 crore for IndianOil and Rs 400 crore for IBP).

The Government had announced on Monday that the first tranche of oil bonds amounting to Rs 5,750 crore would be issued on Wednesday, followed by the second tranche of Rs 5,750 crore before March 15. Speaking to mediapersons, Mr Sarthak Behuria, Chairman, IndianOil, said "If we get bonds in this manner, then I think we will maintain the profitability at last year's level. Operationally we are not making profit and most of our profit in the current financial year would be through refinery discounts that we get from upstream companies, subsidy sharing by upstream companies, dividend income, bonds, and partial sale of our stake in GAIL."

For 2004-05 IndianOil made a net profit of Rs 4,891 crore.

STAKE IN GAIL

Asked about when the company proposes to offload its remaining stake in GAIL as well as its 20 per cent stake in ONGC, Mr Behuria said, "The decision would be market-driven and not fiscal-driven."

IndianOil recently sold half of its stake in GAIL (India), totalling around 20.4 million shares, through an open market transaction, at Rs 275 per share. The company had taken its board's approval for selling 20 per cent of 9.3 per cent stake in ONGC and 50 per cent of its stake in GAIL (half of which it has offloaded).

Mr Behuria also indicated that IndianOil would sell part of its oil bonds to repay its debts and settle taxes. "We will sell some of our bonds to repay our debts and settle taxes like corporate tax. He, however, did not indicate the time of offloading."

Asked if IndianOil will offload oil bonds with 7.3 per cent coupon rate, Mr Behuria said, "7.3 per cent is a good interest income. But we have old bonds worth 6.9 per cent, so we will sell a part of our oil bonds depending on our needs."

FISCAL EXPENDITURE

Regarding the company's plans for financial expenditure in the next fiscal, Mr Behuria said, "Our expenditure in the next financial year is over Rs 7,000 crore, which we will use for projects such as setting up naphtha cracker plants and refinery expansion."

About the various refinery projects of the company, Mr Behuria said the company's board would soon take up for approval the revised cost of the 15-million-tonne Paradip refinery in Orissa. The investment in the refinery is expected to be close to Rs 25,000 crore (refinery plus petrochemical plants) over a period till 2010.

"Earlier, Paradip was scheduled for 6 million tonne but we are now increasing it to 15 million tonne and we expect a detailed feasibility report on this soon," he added. He also said the company will set up a petrochemical complex at the refinery site. As regards the Panipat refinery units, he said, they are at a pre-commissioning stage and the company is expecting to commission all units by June.

As regards acquisition of assets abroad, Mr Behuria, said that the company still hopes to buy assets of French company Maurel & Prom and the Canada-based Niko Resources.