New Delhi: The state-owned Indian Oil Corporation Ltd (IndianOil), exploring options to increase retail sales, has had a breakthrough with Pakistan deciding to import lube oil from India.
"While lube and diesel remain on the negative (trade) list, Pakistan has placed an order for import of lube oil.
The first cargo of 4,886 tonnes was shipped out from Haldia on July 6 and the second of around the same quantity is being negotiated and is expected to be shipped in August," IndianOil Chairman and Managing Director Sarthak Behuria told the media here Monday.
The value of the first order is around Rs 200 million.
The company is looking forward to more exports to Pakistan once its Panipat refinery starts functioning at its full capacity of 12 million tonnes in a couple of months.
Initially the attempt would be to meet the local requirement but there are plans to export products across the border too, Behuria said.
With under-recoveries in petrol, diesel, kerosene and cooking gas continuing to hit the firm's bottom-line, he said various retail models to raise revenues were under consideration.
"This could be through increasing non-fuel retails within our outlets or putting up our fuel outlets in big malls or selling our lubes through FMCG (fast-moving consumer goods) outlets," he said.
"Pantaloon, Bharti and other companies are putting up malls in metros and suburban areas. We are looking at putting up lube and other fuels in these outlets. We are also studying having a special purpose vehicle (that is, a new company) for our non-fuel retails," Behuria said.
Giving details about the first quarter (April-June) performance, Behuria said the company was losing Rs.1 billion due to under recoveries on petrol, diesel, kerosene and cooking gas.
Despite the hike in prices of petrol and diesel in June, the company has registered a net operating loss of Rs.14.44 billion during the first quarter of the current fiscal due to the under-recoveries on petroleum products to the tune of Rs 48.98 billion.
This figure is much higher than the under-recoveries of Rs 31.94 billion during the corresponding period last year.
"However, after taking into account the profit of Rs 32.25 billion from the sale of 20 percent of the company investment in Oil and Natural Gas Corp (ONGC), IndianOil has reported a net profit of Rs 17.81 billion in the first quarter as compared to a net loss of Rs 580 million in the same period last year," Behuria said.
The company is hopeful that the finance ministry would soon issue the promised bonds of around Rs 35 billion per quarter to compensate for the under-recoveries arising from the fact that the retail prices were being kept lower than the cost recovery prices of petroleum products.
This year IndianOil and its subsidiary Chennai refinery are expected to import around 40 million tonnes of crude oil as against 37 million tonnes last year.
In the first quarter the company has imported 10 million tonnes crude oil till June, while it sold 12.27 million tonnes of petroleum products including gas in the domestic market.
Besides imports, IndianOil gets a substantial share of the domestically produced crude oil.
In exports, the company is expecting to do better than last year's 1.36 million tonnes, having accomplished 0.6 million tonnes in the first quarter.
With no government directive on increasing retail prices of petroleum products despite the increase in global crude prices, which have averaged over $69 per barrel since the last increase in retail prices, the company is looking to sustain increased refining margin to offset retail losses, Behuria said.
The current refining margin of IndianOil is $6.70 a barrel after accounting for discounts to marketing companies.
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