Date:09/06/2004 URL: http://www.thehindubusinessline.com/2004/06/09/stories/2004060901230200.htm

Back IOC Q4 net falls 16 pc on retail price freeze

Our Bureau

Mr M.S. Ramachandran, CMD, Indian Oil Corporation Ltd, addressing a press conference in the Capital on Tuesday. — Kamal Narang

New Delhi , June 8

INDIAN Oil Corporation (IOC) has recorded a profit of Rs 1,849.9 crore on an income of Rs 32,353.10 crore during the fourth quarter of fiscal 2003-04 ended March 31, 2004.

For the corresponding period in the previous year, the company recorded a net profit of Rs 2,199.65 crore on an income of Rs 31,394.45 crore. This translates into a 16 per cent drop in net profit and a 3 per cent rise in income. The drop in profit is on account of the freeze on retail prices in a situation where global prices were rising.

Addressing a press conference here on Tuesday, the Chairman and Managing Director, Mr M.S. Ramachandran, said IOC had incurred a loss in profit of Rs 2,100 crore in the first quarter of current fiscal due to freeze on prices.

"Price increase (of petroleum products) is necessary. Without price rise, operations are not sustainable," he said.

The company had lost Rs 504 crore due to non-revision of petrol and diesel prices and another Rs 1,639 crore on account of non-revision of LPG and kerosene between April 1 and June 15.

"IOC will not end up making losses (in the first quarter of 2004-05) because gross refinery margins were good at $5.6 a barrel. But profitability will be very badly eroded as the retail arm was selling products at prices lower than the rate at which they procure products from refineries," he said.

Petrol and diesel prices have not been revised since January even though crude oil has jumped by more than $7 a barrel in the last six months. In the case of LPG and kerosene, prices have not been raised since April 2002.

According to the IOC chief, consultations are currently on with the Government to address the issue of under-recovery of prices. He said IOC was open to the idea of Government fixing a price-band for petrol and diesel but added that reducing duties on crude and petroleum products was a more viable option.