IOC banks on crude spike, bonds to retain profits

With global crude oil prices declining and oil bond in the pipeline, Indian Oil Corporation (IOC) is expected to maintain its last year's profit.

"With the recent decline in crude oil price and the proposed Rs 11,500 crore oil bond issue lined up, IOC will be able to maintain its last year's profit, or even post a better result," said S Behuria.

The oil major, which has 60 per cent share in the domestic market, expects to get Rs 6,000 crore from oil bonds. The company is loosing around Rs 800 crore every month due to under-recoveries on sale of LPG and kerosene. However, it is currently making profit form petrol and diesel sale, he said.

"The crude oil price is at a comfortable level. It has been the lowest price in recent past," he noted.

With the drop in international crude prices, the Indian basket is now available at $52 per barrel, Behuria said.

The LPG crisis also has subsided as the Reliance refinery has restarted after a long maintenance shutdown, he added.

"IOC would strictly monitor the distribution of LPG. We are not keeping stock for more than 3-4 days, but common user would not be hurt due to illegal channel," he assured.

Unscheduled shut down of IOC's own refineries had also added to the crisis. Commenting on the ONGC stake sale, Behuria said Committee for Economic Cooperation is yet to approve its proposal. This would fetch around Rs 13,000-14,000 crore for the company, he noted.

"The Union cabinet has given an in-principle nod for the merger of IBP Company with IBP. IOC, though, would be required to make a presentation to the committee of secretaries."

The current swap ratio proposed by the boards of both the companies was 125 shares of IOC for every 100 IBP shares. The merger was likely to be complete within the next six months, he said.