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The current uptrend in crude prices and the yawning under-recovery in diesel, LPG and kerosene, have pushed the borrowings of IndianOil by Rs 5,000 crore so far in this quarter.
IOC ended the December 2010 quarter with Rs 50,000 crore borrowings, up from Rs 45,000 crore in the previous fiscal. Nearly 60 per cent of the borrowings were short term in nature.
According to the Chairman Mr S.V. Narasimhan, if the current trend continues IOC may end up with Rs 16,000 crore under-recoveries during the January-March 2011 quarter. To finance the cash shortfall, the borrowings should move up by another Rs 5,000 crore to a total of approximately Rs 60,000 crore.
The IOC Chairman was talking to newspersons on the sidelines of 16th Refinery Technology Meet in Kolkata on Thursday.
Assuming a Rs 11,000-crore cash subsidy payable to the company against under-recoveries, borrowings are finally expected to come down little below Rs 50,000 crore at the beginning of the next fiscal.
?The borrowings for the year will be contained within manageable limits. However, considering the global issues and the trends in crude price movements there are concerns about the next fiscal,? he said adding that the company was expecting the Government to consider duty restructuring to ensure adequate cash-flow to the oil marketing companies.
The average interest costs are also expected to move up from 5.6 per cent till December, 2010 ? marginally higher from the last year's level.
Refining margins up
Meanwhile, the company recorded an improved gross refining margin (GRM) of approximately $5-5.5 a barrel during the last couple of weeks. This was $0.5-1 a barrel higher than the GRM recorded during the first nine months of this fiscal.
Paradip on schedule
Mr Narasimhan said that the construction of the proposed nine-million-tonne Paradip refinery was progressing according to schedule.
?We will start commissioning the main units of Paradip refinery beginning March 2012,? he said.
IOC is expected to spend approximately Rs 13,000 crore as capital expenditure during the next fiscal. Of the total 70 per cent will be directed to Paradip.
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