Saturday, November 12, 2011

Indian Oil Corporation and petroleum price hike

By D.Dhanuraj

Some times it is very difficult to understand the rationale and logic of these numbers and demand Oil marketing Petroleum comapnies raise. Sometimes it is confusing also. According to reports, IOC had decalared  an equity dividend of 95.00% amounting to Rs 9.5 per share for the year 2010 - 2011. According to the annual report of IOC which is available on their website, the profit after tax for the year 2010-2011 is Rs 7445 crores. in Chairman's report, though he discusses about the gap between international price and the domestic price, he does not delve into the details of how much it costs to the company for every liter of Petrol sold. 

Moreover, IOC is a Maharatna company. the definition and status of Maharatna company might be different but it actually helps the share holders to understand the value of the company. Here, a Maharatna company which has a profit of Rs 7445 crores demands for the price hike telling the world that they are on loss. 

I am not able to decipher the whole argument of IOC here though I believe that petrol prices should link with international prices... are we inflating the share value of IOC by covering up cost and expenses of IOC?

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