Pushed by soaring global crude oil prices and pulled by government pressures that have led to selling fuel well below costs, state-run Indian Oil Corporation Ltd (IOC) on Thursday posted its biggest quarterly loss ever at Rs. 22,451 crore in the first quarter of the current fiscal against a loss of Rs. 3,719 crore last year.
This was also the highest loss for the current quarter for any Indian company, which suffered as the government held back subsidies for under-selling diesel and petrol. In the June-September 2011 quarter, IOC lost Rs. 7,418 core, which was the then record loss.
"The increase in loss is because of higher crude oil prices, non-receipt of subsidy and depreciation of the rupee against the dollar," said RS Butola, chairman and managing director.
While global crude oil prices continue to rule above the $100 a barrel mark, the rupee declined 8.6% against the US dollar in the quarter.
The depreciation of the rupee against the dollar has a direct impact on the company’s bottomlines as it increases the cost of crude oil that the oil companies import to refine. India imports almost 80% of its oil requirements and had spent $150 billion (Rs. 829,050 crore) in the last fiscal year on oil imports.
The finance ministry, which is already struggling to contain a budget deficit and inflation, compensates the state-run refiners for selling fuels such as diesel, cooking gas (LPG) and kerosene below their costs.
During the first fortnight of August, IOC said it suffered a loss of Rs. 1.37 a litre on petrol, Rs. 12.13 a litre on diesel, Rs. 28 a litre on kerosene and Rs. 231 per LPG cylinder. The company's borrowings as on date stood at Rs. 84,000 crore.
"After having received Rs. 8,041 crore as discounts from sister oil companies (ONGC, Oil India and GAIL) on crude oil, our losses or under-recoveries on selling diesel, LPG and kerosene below the cost price still stand at Rs. 17,485 crore for the first quarter," Butola told HT.
"The combined under-recoveries of the three state-owned oil firms is Rs. 32,750 crore after including the discounts on crude oil of Rs. 15,061 crore from upstream oil firms," he said.
IOC recorded a 5.3 % increase in sales at Rs. 96,603 crore against Rs. 91,705 crore a year ago. Shares fell 1.8% to Rs. 252 at close on BSE, the lowest level since June 19.