Net worth doubles, no need to report to BIFR: Chennai Petroleum

Standalone net worth as on March 31, 2016 has improved to Rs 3,297 crore

Indian Oil Corporation (IOC's) subsidiary and one of the country's largest refining companies, Chennai Petroleum Corporation Ltd (CPCL), has come out from a situation of reporting to the Board for Industrial and Financial Reconstruction (BIFR) as its net worth improved in 2015-16 by around 99 per cent.

Earlier, in line with the provisions of Sick Industrial Companies (Special Provisions), Act, 1985, CPCL had reported erosion of more than 50 per cent of peak net worth to BIFR in October 2014 and further reduction in its March 31, 2015 net worth in October 2015.

Due to various short- and long-term measures undertaken by the company in 2015-16, the net worth (standalone) as on March 31, 2016 has almost doubled to Rs 3,296.67 crore from Rs 1,655.08 crore as on March 31, 2015, which is higher than Rs 1,897 crore, being 50 per cent of the peak net worth during the immediately preceding four financial years and the company is not required to report to BIFR in this regard.

In 2015-16 company's profit stood at Rs 771 crore as against loss of Rs 39 crore in 2014-15. This was mainly due to improvement in operating areas, support from holding company Indian Oil and softening of prices in international market and better working capital / loan management

The company's turnover, however, reduced to Rs 34,953 crore in 2015-16 from Rs 47,878 crore, a year ago. This was due to a steep fall in crude oil and product prices and reduction in throughput. Total throughput of the company during the year was 9,644 TMT as compared to 10,782 TMT in the previous year. The distillates yield was the highest at 72.5 per cent as against the previous best of 72.1 per cent in 2014-15.

CPCL's peak networth during the last four years prior to 2015-16 was Rs 3,793 crore and the net worth as on March 31, 2014 was Rs 1,722 crore. In line with the provisions of Sick Industrial Companies (Special Provisions), Act, 1985, CPCL had reported the fact of such erosion of more than 50 per cent of peak networth to BIFR in October 2014.

The loss for the financial year ended March 31, 2015 was Rs 39 crore and consequently the networth further reduced to Rs 1,655 crore as on March 31, 2015.

Despite the fact CPCL is one of the most productive refineries in the country, its profitability was getting hit due to external factors, mainly due to crude price. While other refineries also face the heat, pressure on CPCL is high, considering it is the only standalone refinery in India.