For state-run OMCs, deleveraging may have peaked

Dream run of declining net debt level for 3 state-run oil marketing companies has hit rock-bottom

The dream run of declining net debt level for the three state-run oil marketing companies (OMCs) has now hit rock bottom, with analysts expecting the three companies to start a new capital expenditure (capex)-driven cycle. 

“Between FY14 and FY16, working capital requirements were low, underrecoveries lower and OMCs managed to repay debt, which was the primary reason for declining debt levels. This will now change, as net debt reduction for the three OMCs has now bottomed out,” said an analyst from a domestic brokerage firm. 

At a consolidated level, Hindustan Petroleum Corporation’s (HPCL’s) net debt for 2015-2016 was at Rs