Indian Oil's net rises 25 percent on weakening dollar

Wednesday, 31 October 2007, 07:00 Hrs
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New Delhi: Indian Oil registered an increase in net profit of over 25 percent in the second quarter ended Sep 30 as a stronger rupee reduced crude import costs.

The company, however, indicated that its under-recoveries on sale of petroleum products might increase if prices were not revised.

India's largest public sector company recorded a net profit of 37.1 billion from April-Sep, compared with 28.8 billion for the corresponding period last year.

Among the reasons for better performance was gain in foreign exchange variation and increase in average gross refining margins. For the second quarter, the company recorded a gain of 14.4 billion on foreign exchange variations, while the gross refining margins increased to $8.4 per barrel, compared to $3.13 per barrel the same period last year.

While he expressed satisfaction over the physical performance, IOC chairman Sarthak Behuria expressed concern over the outlook for the next six months due to rising oil prices.

Strongly pushing for a price revision, Behuria said the government had to come up with a new mechanism to mitigate the oil companies' "burden", "as oil bonds are not enough".

Indian Oil currently loses 3.9 per litre of petrol, 6.22 per litre of diesel, 174 per kg of liquefied petroleum gas (LPG) and 15.99 per litre of kerosene. The total under-recoveries incurred this year till Sep stood at 35 billion

Behuria said that if crude prices did not increase from the present level and there is no new burden-sharing mechanism, then the total under-recoveries for 2007-08 would be 85.7 billion.

"Oil bonds are only on paper. We need to generate cash inflow," he said, expressing his frustration that despite its size, Indian Oil's market capitalisation was low, with its share price languishing at 450 in the current bullish bourses.
Source: IANS
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