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The Government compensation has helped Indian Oil Corporation Ltd bring down its net loss from the same quarter last fiscal. IOC's net loss in the first quarter of 2013-14 came down to Rs 3,093 crore from Rs 22,451 crore in the corresponding quarter previous year.
The losses have narrowed because the company has received compensation for selling fuel below market cost. Under-recovery has declined to Rs 1,212 crore as on June 30 against Rs 17,485 crore on the same date of the previous year, said R.S. Butola, Chairman.
During the first quarter of the current fiscal, IOC lost Rs 13,625 crore on selling diesel, domestic cooking gas and kerosene at a Government-controlled price. Of this, it received Rs 8,152 crore from upstream companies (ONGC, OIL, GAIL), while the Government has assured to pay cash compensation of Rs 4,261 crore. Post these compensations, it is left with uncovered losses of Rs 1,212 crore.
When asked if the company will have to absorb these losses, Butola said IOC is seeking additional compensation from the Government.
Besides the unmet under-recovery, exchange rate loss of Rs 840 crore and provisioning of Rs 400 crore for employee arrears, added to the companies losses.The depreciating rupee against the dollar played spoilsport as the company suffered a foreign exchange loss of Rs 4,024.10 crore in first quarter 2013-14, increased from Rs 3,187.01 crore in the same quarter previous year.
IOC reported a gross refining margin of $4.23 a barrel for the quarter ended June 30 against a negative $2.25 in the same quarter last year.On the positive front, IOC for the first time reported positive margins for the petrochemical business."We had a petrochemical margin of Rs 779 crore in Q1 compared with Rs 256 crore a year ago," Butola added.
IOC targets to raise around $500 million through a syndicated loan by end of this month.
"As per the Reserve Bank of India guidelines, we can raise $750 million for capital expenditure, and $1 billion for working capital requirements," said P.K. Goyal, Director (Finance).
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