Indian Oil Corporation (IOC)'s turnover is all set to cross the Rs 5,00,000-crore mark in the current fiscal for the first time, chairman B Ashok said, while addressing the company's 56th annual general meeting.
In 2013-14, the state-owned oil retailing major's turnover grew 10.3% to Rs 4,57,553 crore. However, it saw decline in domestic volumes.
Even though IOC maintained its position as the market leader with product sales of 75.53 mt (including petroleum products, gas, petrochemicals and exports) for 2013-14, the overall volumes in domestic sale of petroleum products registered a drop of 1.5 million tonne (mt) as compared to the previous year. This was mainly due to the prevailing dual-pricing policy in high speed diesel that resulted in sharp decline of bulk sales. Decline in sale of commercial and passenger vehicles, improved power situation in the country, and shift of industrial users to alternative fuels were some of the other reasons for the drop in diesel sales.
In the current fiscal, the company's revenues could be hit following drop in crude prices, which may in turn bring down prices of fuel products like petrol and diesel. Petrol price are currently market linked and diesel prices are also likely to soon get market linked. The fuel sales volume growth is also likely to rise at slower pace is the economy is still in a recovery mode.
"Diesel sales volumes could see a marginal growth of around 3-4% in the current fiscal due to slight recovery in economic activities," Dhaval Joshi, an analyst with Emkay Global said. In last fiscal, diesel consumption which accounts for 40% of domestic petroleum product consumption, declined by 1%, in stark contrast to the average annual growth rate (AAGR) of over 7% registered during 2006-07 to 2012-13.
IOC's borrowing have sharply fallen to Rs 61,900 crore from Rs 86,263 crore in March, CFO PK Goyal noted. This would help the company's profitability in current fiscal. Goyal said that fall in under-recoveries and regular subsidy payments by the government's since the beginning of this fiscal has helped the company to bring down borrowings.
Bringing Paradip refinery on stream has become the top most priority of the state-owned refiner. Sanjiv Singh, director - refineries, said that once the Paradip refinery comes on stream, all other refineries will see at least $1/barrel of jump in gross refinery margins. "we expect drastic change after Paradip," he said. The 300,000-barrels-per-day Paradip refinery whose commissioning is delayed several times is likely to start crude processing in December.
IOC has many old refineries with small capacities. When being asked if there was any plan to phase out these refineries, Singh stressed that the company had no plans to shut any of its old refineries.
"We don't intend to shut any of old refineries. We may add some value added products rather than adding capacity. We need not stick to only petrol and diesel. We can add petrochemicals in these refineries," Singh said.
Apart from Paradip, the company has been planning to set up a refinery on west coast and have shortlisted around three sites after studying 12 probable site. Singh declined to share names of these site, but previous news reports suggest that the company might be considering Mundra Port for setting up this refinery. "Its at very preliminary stage but we have not identified where we are going to set up the refinery. Certainly on the west coast, we feel there is a need for refinery. We have teams for identifying sites. Variety of locations are being considered and we need to evaluate them," Ashok said. The company would require to spend around Rs 35,000-40,000 crore for this 15 MT refinery.