The Hindu Business Line : IOC may consider liquidating bonds, cross-holdings

Mumbai, April 23 Indian Oil Corporation has been financially constrained due to under-recoveries. The borrowing has increased to Rs 36,000 crore for financial year 2007-08, said Mr G.C. Daga, Director (Marketing), IOC.

Addressing media persons on Wednesday, he said that if the situation continues, IOC could consider liquidating its oil bonds and cross-holdings in other companies.

IOC’s under-recoveries has been of Rs 43,000 crore for the financial year 2007-08. Total under-recoveries of all public sector oil marketing companies has been to the tune of Rs 77,000 crore.

Loss count

Mr Daga, said that every day, the company was losing Rs 238 crore due to under-recoveries. “In spite of the under-recoveries, we are committed to our customers. We don’t have any plans of shutting down some of our retail outlets. New investments for marketing operations will continue,” Mr Daga said.

For 2007-08, IOC has sold 58.3 million tonnes of petroleum products, registering an 8.7 per cent growth in volumes as compared to the previous year.

The market share has increased by 1.1 per cent to touch 48.9 per cent and exports during the year touched 3.3 million tonnes at growth of 8.5 per cent.

Mr Daga said that for year 2008-09, the company plans to invest Rs 2,000 crore in various marketing activities of which Rs 790 crore would be invested in retail network expansion and upgradation, Rs 600 crore in the LPG business, which includes Autogas network expansion, he said.

He added that Rs 400 crore would be invested towards bulk storage and additional tankage for petroleum products, Rs 90 crore investment for aviation business and Rs 50 crore for augmenting bulk storage facilities for large volume consumers.

Fuel stations

Mr Daga said that during the year gone by, the retail network was further expanded with the commissioning of 1,200 petrol stations across the country of which Kisan Seva Kendras (KSK) or small format rural fuel station alone were 726.

Currently, IOC has over 17,626 retail outlets, of which about 2,100 are KSK. For the current year, the company proposes to commission over 800 KSK to further strengthen its rural presence.

Mr Daga said that the KSKs are proving to be successful. Of the total diesel sales, KSK alone contributes 4.5 per cent. The petrol sales were 2.7 per cent, he said.

“When we planned KSKs, we thought these stations, which are located far away from main highways, could do business of 25,000 kilo litres. However, they are doing business of over 40,000 kilo litres. We have also managed to sell a number of non-fuel items through these centres,” Mr Daga said.