While it is imperative to increase the price of motor spirit (petrol), we are mindful of the fact the market takes time to absorb the recent rise in price. We are reviewing the situation every day and are waiting for the right opportunity. We will have to make it (a price increase) acceptable, Butola told reporters after announcing the companys fourth quarter results. The desired price increase would be R1.35 a litre, the IOC chairman added.
IOC is making a loss of about R4.50 a litre on petrol although prices were revised on May 15 by R5, the steepest increase so far after the fuel was decontrolled last June. Since the price decontrol, petrol price has gone up by R15.40 or 32% in Delhi as the Indian basket of crude oil has been ruling at an average $117 a barrel so far this fiscal, compared to last fiscals average of $85 a barrel.
IOC reported a 29.72% decline in net profit growth for the fourth quarter ended March 31, 2011, to R3,905 crore due to delays in receipt of cash subsidy from the government of India. Despite an increase in the gross refining margin to $7.8 a barrel in 2010-11from $3.38 a barrel the year before, IOCs net profit for the year declined 27.15%. Gross turnover went up 30% to R93,843 crore in the fourth quarter from R71,872 crore in the same quarter a year ago. For the whole year, gross turnover touched, R3,28,744 crore, from R2,71,095 crore., a growth of 22%.
IOCs net sales in the fourth quarter rose 31% to R86,880 crore, while the same jumped 22% in the whole 2010-11 fiscal to R3,02,954 crore.
Butola attributed the slower growth in profits to higher interest payments due to delayed subsidy receipts, high depreciation and some losses from its latest venture polymer business. IOCs borrowings have skyrocketed to Rs 67,880 crore in 2010-11. Last year, the company had to borrow Rs 1,500 crore, just because of delay in receiving fuel subsidy. In 2010-11, IOC had to absorb a loss of Rs 4,848 crore due to selling fuel below cost. Of this, Rs 1,048 crore is from selling petrol below cost. Upstream companies like ONGC, Gail India and Oil India and the government shares part of the subsidy burden.