Debt stands at Rs 95,000 cr; no compensation from Govt as of now

Come November and Indian Oil Corporation Ltd (IndianOil) fears its borrowing may cross Rs 1 lakh-crore, with no compensation from the Government as of now.

P. K. Goyal, Director (Finance), IndianOil, said: “as on date, our borrowings stand at Rs 95,000 crore, and we fear it will cross a lakh crore mark in November if the current trend continues.”

Stating that there was a limit to which a company could borrow, Goyal told Business Line that if this situation continues, it would be difficult to raise money and finance crude oil purchases.

In October last year, IndianOil got shareholders’ nod to raise its borrowing limit by Rs 30,000 crore to Rs 110,000 crore, as it became increasingly reliant on debt (because of Government policies) to meet even its day-to-day expenses.

The company increased its borrowing limit from Rs 80,000 crore to Rs 110,000 crore.

IndianOil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, incur losses for selling petroleum products at Government-regulated prices.

Total loss

For the first two quarters of the current fiscal, total losses incurred by these companies was close to Rs 85,000 crore, of which, about Rs 30,000 crore will be compensated by the upstream companies, and Rs 55,000 crore is expected from the Government.

While the upstream companies — ONGC, Oil India, and GAIL (India) — have already borne the subsidy burden of Rs 14,000 crore in the first quarter and a similar amount is expected for the second quarter, compensation from the Government is unlikely to flow in before November-end/December.

Meanwhile, the Finance Ministry has issued letters to all Ministries seeking cash in the first supplementary demand for grants, which is expected in the forthcoming winter session of Parliament.

The companies currently lose Rs 9.82 on sales of every litre of diesel, Rs 33.93 a litre on PDS kerosene and Rs 468 per 14.2-kg domestic LPG cylinder.

(This article was published on October 24, 2012)
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