A higher subsidy burden saw Indian Oil Corporation net profit drop 30 per cent for the fourth quarter ended March.
Net profit in the January-March quarter stood at Rs 3,905.16 crore from Rs 5,556.77 crore a year ago, IOC Chairman R S Butola said. IndianOil absorbed Rs 4,845 crore of revenue loss on fuel sales during 2010-11 after accounting for cash subsidy from the government and assistance from upstream oil and gas producing companies. The company got Rs 22,604.84 crore in cash fuel subsidy from the government and Rs 16,703.73 crore from upstream firms by way of discounts.
Despite the burden sharing, the company had to absorb 8.2 per cent of the gross revenue loss during 2010-11. “There were Rs 3,803 crore of the net under-recovery (revenue loss) on diesel, domestic LPG and kerosene during 2010-11. Besides there were also revenue loss on petrol,” he said.
The revenue loss, known as under-recovery in industry parlance, on controlled products of diesel, domestic LPG and kerosene was Rs 650 crore higher than the previous year. For the full year, IndianOil net profit fell to Rs 7,445 crore in 2010—11 fiscal from Rs 10,221 crore in the previous year. IndianOil chairman said 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. Higher depreciation was also a factor for the dip in profits.
The company is still losing Rs 4.58 per day on petrol even after the steep Rs 5 a litre hike from May 15. From June 1, which will take into account the average international price of the second fortnight of May as against the average of first fortnight of May that was taken into account for the steep hike, the revenue loss on petrol will come down to Rs 1.15. After adding the value added tax (VAT), the desired increase in price of petrol in Delhi would be Rs 1.35 a litre, Butola said.
He said the company’s borrowing had risen to Rs 52,734 crore on March 2011 from Rs 44,566 crore last year.
Since March, borrowing have increased by more than Rs 15,000 crore to Rs 67,800 crore currently.