Indian Oil Corp. today registered its biggest ever quarterly loss of Rs. 7,490 crore in the July-September quarter and warned of supply disruptions if the government fails to compensate the company for selling fuels below cost. Together with Rs. 3,719 crore loss in the first quarter, IOC has seen the worst ever net loss in the first half of current fiscal.
IOC lost Rs. 11,757 crore on selling diesel, domestic LPG and kerosene below cost in the second quarter. Of this, it had to absorb Rs. 7,837 crore after accounting for dole-out of Rs. 4,300 crore from upstream firms like ONGC.
Besides, it lost Rs. 1,134 crore on selling petrol below cost in this fiscal and was forced to raise prices by Rs. 1.80 a litre last week after rupee depreciated by over Rs3 to Rs. 49.40 to a US dollar.
IOCL chairman said that they have not been compensated for selling diesel, domestic LPG and kerosene at cost lower than market price. As a result, they have to borrow heavily to meet their day-to-day expenses, including buying crude oil.
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.
Delays in getting compensation from the government and widening losses have forced IOC to borrow more money for crude oil purchases and general corporate requirements. Its interest costs nearly tripled to Rs. 1,484 crore in Q2, he said.
The stock reacted negatively to the result and closed at Rs. 287.90 very near to its 52 week low of Rs. 286.90. 52 week high for the stock is Rs. 419.40
The stock is expected to make fresh 52 week low in coming days. Hence fresh entry into the counter should be avoided at this point of time.
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