Only IOC will recover in Q2

With only 24 days left in the July-September 2005 quarter, today's oil price hike may help only Indian Oil Corporation among the public sector oil marketing companies to come out of the red.

Others like Hindustan Petroleum, Bharat Petroleum and IBP Ltd are still expected to report losses for the current quarter. Even for the current financial year, things are unlikely to improve for these companies.

"We are not expecting BPCL and HPCL to make significant profits this year. IBP would report a loss," Petroleum Secretary SC Tripathi said.

Today's price hike is expected to help IndianOil pare its under-recoveries by Rs 350 crore a month, BPCL by Rs 200-300 crore a month, HPCL by Rs 200 crore a month and IBP Ltd by around Rs 50 crore. The four oil marketing companies had posted net losses of Rs 1,227 crore during the April-June quarter this year.

Industry sources said the financial performance of the oil marketing companies would depend on the timing of the oil bond issue. IndianOil is expected to receive around 40 per cent of the issue, which is estimated to be at least Rs 10,000 crore. HPCL and BPCL's share is expected to be around 25 per cent each, with the remaining earmarked for IBP Ltd.

"If these are issued before the end of the second quarter, then we will make marginal profits," said a senior BPCL executive.

IndianOil Chairman and Managing Director S Behuria said the company would continue to make operational losses during the current quarter but a part of the losses would be recovered through the bond issue.

"Besides, income from our subsidiaries and discounts from other companies is also expected to come this quarter. This will help us to report a small profit," he said.

The government is expected to ask Oil and Natural Gas Corporation to pay special dividends to the Centre to make good the Rs 6,000 crore revenue shortfall caused by the losses of the oil marketing companies.