The Hindu Business Line : Oil marketing companies slip on liquidity crunch fear

Kolkata, Oct. 23 Stocks of public sector oil marketing companies on Thursday dropped substantially on selling pressure. IOC declined by 5.5 per cent to Rs 368.35, BPCL plummeted by 6.7 per cent to Rs 301.25 and HPCL lost 7.4 per cent to close at Rs 193.35. According market sources, there were marked selling by FIIs in the OMC counters.

According to analysts and brokers, the possibility of retail oil product price revision and clearance of dues by aviation companies through equated monthly instalments were considered as negatives.

Falling crude oil price had been positive for the public sector oil marketing companies, which sells petro products at subsidised rates. On the other hand, private sector RIL declined 7.62 per cent as falling crude oil price meant decline in refining margins.

Mr V.K. Sharma of Anagram Securities felt that with the Government on an election mode; a downward revision in retail prices could be expected early, which would squeeze profit.

According to Mr Ajit Day of Dayco Securities, deferred payment by aviation will help public sector oil marketing companies in improving their liquidity situation.

According to industry sources, the deferred payment of arrears by aviation companies was without interest.

“When an oil marketing company is starved of liquidity and meeting its cash requirement through borrowing, it is not an healthy situation,” said a senior official of a public sector oil marketing company.

Aviation fuel, however, fetches better margins for the marketing companies as it is not subsidised. IOC is the biggest marketer of ATF with around 62 per cent share of the total sales in the country.

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