IOC registers biggest- ever loss, warns of supply shortage
Mumbai   10-Nov-2011

Country's largest fuel retailer IndianOil registered its biggest- ever quarterly loss of Rs 7,485.55 crore in the July- September period.

The company warned of supply disruptions if the government fails to compensate the company for selling fuels below cost.

The net loss of Rs 7,485.55 crore for the second quarter of the fiscal was the biggest quarterly loss and was in sharp contrast to the net profit of Rs 5,293.95 crore it earned in the year- ago period, IndianOil (IOC) Chairman R S Butola told.

"We have not been compensated for selling diesel, domestic LPG and kerosene at cost lower than market price. As a result, we have to borrow heavily to meet our day- to- day expenses, including buying crude oil," he said. IOC's borrowings have touched a whopping Rs 73,296 crore and its debt- equity ratio worsened to 1.66: 1 from 0.95: 1 as on March 31.

" At this rate, no bank will be willing to lend us beyond December. We will not be able to pay for crude oil we import and thus we will have to shut some refineries which would result in disruption of fuel supplies," he said.

Butola said, losses on fuel sales widened as crude oil gained and rupee fell against the US dollar. The government meets at least half of the revenue that state- run fuel retailers lose on selling diesel, domestic LPG and kerosene at below market price. It has given only Rs 15,000 crore against the Rs 64,900 crore that retailers have lost on fuel sales in the first half of the this fiscal.

Together with Rs 3,719 crore loss in the first quarter, IOC has seen the worstever net loss in the first half of current fiscal.