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Business News/ Industry / Energy/  Indian Oil to start production from Paradip refinery by October
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Indian Oil to start production from Paradip refinery by October

The company plans to reach an 80% capacity utilization of the refinery before the end of fiscal year 2017

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Mumbai: Indian Oil Corp. Ltd (IOC) plans to start its Paradip refinery in Odisha by October and increase its capacity utilization to 80% before the end of fiscal year 2017, the company said during a conference call with analysts late Friday evening.

The call was organized to inform analysts on the proposed 10% divestment of the company, scheduled for Monday, and its future plans.

The share sale may fetch the government almost 9,890 crore, based on a 15-day average price of the stock at 407.35. The floor price for the share sale will be announced on 22 August. The government currently holds 68.57% in the company.

The company informed analysts that it has earmarked an investment of close to 15,000 crore for the current fiscal year. These will be largely put into augmenting the capacity of its existing pipelines, setting up a new pipeline, a petrochemical plant at Paradip and a liquefied natural gas (LNG) regasification terminal at Ennore in Tamil Nadu.

A major part of the capital expansion will go into its pipelines projects, which comprises the 2,321-crore Paradip-Hyderabad pipeline; 1,823 crore will be invested for augmenting the capacity of the Paradip-Haldia-Durgapur LPG pipeline, and 887 crore for the Jaipur-Panipat naphtha pipeline. Another mega investment will be for the proposed 3,150-crore polypropylene project at its yet-to-be-commissioned Paradip refinery.

The management told analysts that all the projects have been planned with a minimum internal rate of return (IRR) of 13%.

“I am positive on IOC from a long-term perspective," said an analyst with a domestic brokerage who did not want to be named.

Analysts have earlier said that the company’s much-delayed Paradip refinery will continue to be a drag on the firm’s profits in the initial years although it will increase its revenues substantially.

IOC and its peer group oil marketing companies—Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL)—have been the biggest beneficiaries of the fall in crude oil prices and de-regulation of diesel since October 2014.

While shares of IOC have performed the worst among the three companies, it toppled Reliance Industries Ltd (RIL) as the biggest profit making company of India in the first quarter. Its profit after tax for the June quarter stood at 6,435.70 crore.

Shares of Indian Oil fell 0.70% to Rs.394.45 on BSE, while the benchmark Sensex shed 0.88% to close at 27,366.07 points.

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Published: 22 Aug 2015, 12:43 AM IST
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