Profits of oil companies under pressure

Profits of oil companies under pressure
ENS ECONOMIC BUREAU

MUMBAI, JULY 31: The profitability of public sector oil companies is under pressure. Indian Oil Corporation and Bharat Petroleum Corporation Ltd (BPCL) have reported a decline in net profit during the first quarter ended June 2000.

BPCL posted a seven per cent drop in net profit at Rs 187.6 crore for the quarter despite an 83 per cent growth in net sales at Rs 10,809.7 crore. The fall in net profit was mainly due to increase in depreciation for the quarter at Rs 2,245 crore on account of higher procurement of liquefied petroleum Gas (LPG) cylinders to meet enhanced target for enrollment of customers, BPCL said.

LPG cylinders worth Rs 166.81 crore were procured during the quarter against Rs 46.05 crore spent on the account during the same quarter last year, it said adding the cost was fully depreciated during the reported quarter.

IOC, India's largest company, has announced a fall of about 21 per cent in net profit at Rs 509 crore during the first quarter of current fiscal despite a 37.3 per cent increase in turnover. The net profit at Rs 509 crore for the first quarter is lower than the net profit of Rs 646 crore achieved during April-June 1999-2000, a company release said.

However, gross turnover for the first quarter of 2000-01 was higher at Rs 26,740 crore as against Rs 19,478 crore during the corresponding period last year. According to IOC, the fall in net profit was primarily due to higher depreciation on LPG cylinders procured to meet the record enrollment target set by the government.

``Oil companies were expected to post poor results in the first quarter of the current financial thanks to rising product prices, high inventory costs and dues running into hundreds of crores of rupees from the Oil Coordination Committee (OCC). With the Government yet to take a view on the LPG cylinder compensation scheme, this is yet another burden which will need to be borne by the oil companies. The trio -- Indian Oil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation -- will be badly hit because of these factors,'' said an analyst.

MTNL net profit rises by 13.5%

MUMBAI:Mahanagar Telephone Nigam Ltd (MTNL), which operates telephone services in Mumbai and Delhi, today announced a 13.5 per cent jump in net profit for the quarter ended June 2000 at Rs 369 crore compared to Rs 325 crore in the corresponding period last year.

MTNL's turnover for the period registered a growth of 10.9 per cent and stood at Rs 1,400.7 crore during April-June 2000 as against Rs 1,263.7 crore in the same period last year. During the last financial year, the company had reported a net profit of Rs 1,087.8 crore on a turnover of Rs 5,182.2 crore. The company's earning per share (EPS) at the end of June 2000 was Rs 23.43 against the annualised EPS of Rs 17.27 for 1999-2000.