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India's public sector oil refiners would have bled profusely in the March quarter (and for the fiscal itself) if the Government had not announced a Rs 38,500-crore cash subsidy to cover for under-recoveries on the sale of petroleum products.
Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp would have posted a combined whopping Rs 38,570 crore loss if the Government hadn't stepped in on time.
The marketers' losses would have been even higher, at Rs 54,197 crore, if the upstream oil majors, chiefly ONGC, had not helped by sharing the subsidy burden.
And, if the Government had paid out the expected Rs 41,020 crore — Rs 22,234 crore for IOC, Rs 10,193 crore for BPCL and Rs 8,593 crore for HPCL — then the companies could have registered a combined profit before tax of Rs 2,450 crore.
As it is, the Rs 38,500-crore outgo has fallen short by 6.1 per cent the amount required to completely erase the companies' losses.
Of the projected losses, IOC is expected to take the biggest hit of Rs 20,544 crore on fuel subsidies, while HPCL is estimated to post a loss of Rs 8,443 crore.
BPCL, which was expected to announce Rs 9,583 crore in losses, has actually managed to post a net profit of Rs 3,962 crore for the fourth quarter (the company announced the numbers on Friday).
IOC is expected to release its results on May 28, followed by HPCL the next day.
No compensation for petrol
Notably, the Government's compensation amount does not include subsidy for losses incurred on sale of motor spirit (petrol).
This would have entailed an additional compensation of Rs 4,853 crore, with the result that the oil retailers would have announced profit numbers to the tune of Rs 2,696 crore (IOC), Rs 1,207 crore (BPCL) and Rs 827 crore (HPCL).
Furthermore, if the interest foregone ( of Rs 3,916 crore) by the oil companies, due to the delayed payment of compensation, is taken into account, their cumulative profit would have risen to Rs 7,687 crore.
Of this, IOC's profit share would amount to Rs 4,414 crore, while BPCL's would be Rs 1,845 crore and HPCL's Rs 1,427 crore.
>arvind.jayaram@thehindu.co.in
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