Thursday, December 1 2005 18:07 Hrs (IST) - World Time -

Banglore: With crude oil prices easing and product prices also coming down, Indian Oil Corporation is faced with lower refining margins and the company will take a hit, its Chairman Sarthak Behuria said today (December 1, 2005).

"In a situation like this, our refinery margins will go down. We had an average margin of USD six; it will come down to USD four. We lose on refinery margins", Behuria told reporters here.

He said the company is losing on the inventory front as well. "Because we bought crude oil at higher prices and we will be selling at lower prices. So, we take a hit", he added.

According to him, the company made losses in the month of October and November because of huge subsidy burden on kerosene and LPG which is expected to top almost Rs 10,000 crore by December-end.

"Third quarter is not going to be a very good quarter", Behuria said.

He expressed hope that government would clear the proposed bonds, adding, IOC would be looking to book it this month itself if it comes through by then. Oil industry is expecting bonds of Rs 11,000 crore, out of which IOC is expecting Rs 5,500 crore to Rs 6,000 crore.

"Then (when cash flows from bonds) our profitability will improve", Behuria said. He also said the company is facing a huge crunch on cash flows, adding, it has been borrowing heavily for capital expenditure.