Badly hit by the subsidy burden caused by huge under-recoveries in sale of petroleum products, Indian Oil Corporation (IOC) on Monday posted a 29.7 per cent drop in net profit for the fourth quarter ended March 31, 2011.
The net profit stood at Rs.3,905.16 crore against Rs.5,556.77 crore a year ago, IOC Chairman R. S. Butola told reporters here. IOC had to absorb Rs.4,845 crore of loss on fuel sales during 2010-11 after accounting for cash subsidy from the government and assistance from upstream firms ONGC and GAIL. “There was Rs.3,803 crore of net under-recovery on diesel, domestic LPG and kerosene during 2010-11. Also, there was an under-recovery of about Rs.1,000 crore on petrol as we did not raise prices in line with international parity despite government freeing petrol price from control in June last year,'' he added.
The under-recovery on controlled products of diesel, domestic LPG and kerosene was Rs.650 crore higher than in the previous year. Besides, the company had to incur Rs.1,500 crore in interest on borrowings it had to resort to because government did not release cash subsidy in time.
Mr. Butola said IOC got Rs.22,604.84 crore in cash fuel subsidy and Rs.16,703.73 crore from upstream firms ONGC and GAIL. The company is still losing Rs.4.58 a day on petrol even after the steep Rs.5 a litre hike from May 15.
IOC earned $7.82 on processing every barrel of crude oil in the fourth quarter of 2010-11 as against a gross refining margin of $3.38 a barrel in the year ago period.
The chairman said company's borrowing had risen to Rs.52,734 crore on March 31, 2011 from Rs.44,566 crore on March 31, 2010. Since March, borrowing has increased by more than Rs.15,000 crore to Rs.67,800 crore currently. “If our compensation for selling fuel below cost is not increased, we will have to borrow Rs.5,000-6,000 crore every month,'' he added.
In 2010-11, the net profit fell to Rs.7,445 crore from Rs.10,221 crore in the previous year. The company crossed the Rs.3-lakh crore mark by clocking Rs.3.29-lakh crore turnover in 2010-11.
Dividend
The board has recommended a dividend of Rs.9.50 per share of Rs.10 each against Rs.13 per share previously.
Mr. Butola said during the year, the company raised the capacity of its Haldia refinery from 6 million tonnes per annum (mtpa) to 7.5 mtpa and the Panipat unit capacity to 15 mtpa from 12 mtpa.
