Largest ever
quarterly loss in Indian corporate history? Check.
Calling for your
product to be regulated again because its only nudge-nudge-wink-wink ‘deregulated’
now? Check.
The people
supposed to pay you money not having any because they paid you out last time?
Check.
Running out of
cash to pay your suppliers? Check.
IOCL’s quarterly
numbers are a disaster, to put it lightly. Its easy to read a number and go
whoa, without really understanding anything about it. Let’s put it in
context, shall we?
You read about
the latest, greatest mobile phone going around? A little birdie called the
Samsung Galaxy S3? It retails for around 38,000. This loss could buy 59 lakh of
those and dump them in the Arabian Sea. Or wait, IOCL’s a oil company right? With
this much money, you could buy around 300,000 Honda City and dump them too. I’m
sure neither Honda nor Samsung would mind.
Actually, the
most interesting part of this for me is the news that soon IOCL will run out of limits
to buy stuff. Then what happens? Its not like we’re self-sufficient or
anything. Does crude oil inflow just stop? IOCL supplies around 40% of India’s
total crude requirement, so if something’s not done soon, we’re stuffed.
Plus a
4000-crore asset writedown and 3100 crore forex loss? Surely, surely these two
could’ve been minimized? Maybe not the inventory writedown (Brent prices fell
20% during the quarter), but the forex loss?
And yes, nothing
is going to improve till prices, especially of diesel, are raised. Prices can’t
be raised because that loses you votes stokes inflation. And so on.
Another
side-effect is that with these kinda losses, they can’t even go in for capex,
which would have helped them to increase the complexity levels of their
refineries (higher the complexity, the lower the quality of crude oil it can
turn to final products, low quality raw material costs less, hence lesser costs
and more profits) and this leads to GRMs in the range of 4 dollars or so, which
is not quite great, in the spirit of putting things mildly.
Quick question,
just how the hell do equity analysts suggest a price for these oil marketing
cos.? Isn’t just about everything determined by the government? Dunno…
In a couple of
days there will be a lot of equity research reports coming your way, if you’re
into those and I’ll be damned if this isn’t the gist of all of them. Everyone
needs to make a living.
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