The Hindu Business Line : `BPCL may not see profit in Q1'

Once known for booking hefty profits, Bharat Petroleum Corporation Ltd (BPCL) has now come to terms with losses. Though expecting the Union Government shortly to provide relief to the oil marketing companies through a fuel price rise as well as subsidy sharing, BPCL is not hopeful of booking profits in the first quarter of 2006-07.

"We may not see a profit in the first quarter as a price rise, if any, would come too late for the quarter," a company official said. The oil sector blue chip has already lost over Rs 2,500 crore on account of sale of petrol, diesel, kerosene and LPG. BPCL may not be the only oil company to find itself on a sticky wicket in the first quarter. The situation is similar with HPCL and IBP. HPCL has already registered under recoveries of no less than Rs 2,000 crore.

Reaping profits

The only exception in the industry could be IOC. Though losing heavily, the company is reaping the harvest of its past investments and is likely to post profits after availing itself the benefits of subsidy sharing and fuel price revision.

The company made a killing from the stock market boom by selling 1.99 per cent stake in ONGC for over Rs 3,600 crore in April, only weeks before the market tumbled.

financial closure

Meanwhile, after slipping successive deadlines for financial closure of Bina refinery, being commissioned through subsidiary Bharat Oman Refineries Ltd, BPCL is finally all set to sign the loan agreement with 20 banks and financial institutions within two weeks.

"The draft agreement is ready and is likely to be formalised in a week or two," a company official said. "If the loan agreement is through in time, we will be able to declare financial closure this month."

The Rs 10,000-crore project for setting up nine million tonne refinery at Bina in Madhya Pradesh had set a debt-equity ratio of 1.6:1.

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