(Reuters )
(Reuters )

IOCL earmarks 25,000 cr for FY20 capex spend, 16% allocated for BS VI upgrade

  • IOCL reported a 17% rise in its fourth quarter profit, driven by foreign exchange gains
  • The key difference between the stages of BS norms is the amount of sulphur content in emissions

Mumbai: Indian Oil Corporation Ltd (IOCL), India's largest refiner and fuel retailer, has earmarked 25,000 crore for 2019-20 to expand its operations, of which 4,000 crore will be spent on BS-VI upgradation, IOCL told analysts after its fourth-quarter results announced on 17 May. At 25,000 crore, the capex is down 5.6% year-on-year.

"Capex this year is only 25,000 crores and with robust internal accruals that we are predicting, we are estimating probably we will have a marginal growth in debt," the IOCL management said in a conference call for analysts.

On 17 May, IOCL reported a 17% rise in its fourth quarter profit, driven by foreign exchange gains. Profit rose to 6,099 crore in Jan-March from 5,218 crore in the year-ago period. Revenue from operations grew 5.6% to 1,44,472 crore.

The company reported foreign exchange gains worth 837 crore during the quarter compared to a loss of 676 crore in the corresponding period in the previous fiscal.

During the quarter under review, gross refining margin or what a refiner makes from processing a barrel of crude fell to $4.09 from $9.12 a year ago. Inventory gains for Jan-March quarter fell to 2,655 crore from 3,428 crore a year earlier.

However, IOCL reported a significant rise in debt due to outstanding dues from the government.

"The company’s debt has increased substantially from 580 bn to 860 bn owing to outstanding dues from the government of about 100 bn, higher capex, and higher working capital needs. The management expects debt to be in the range of 700 bn- 750 bn once the dues are cleared by the government," said IDBI Capital in its report dated 21 May.

BS VI is the sixth stage of the Bharat Stage Emission norms that will come into effect on 1 April 2020. Fashioned on the lines of European emission norms, these guidelines will lay out stringent emission norms for vehicles.

The key difference between the stages of BS norms is the amount of sulphur content in emissions. While BS IV-compliant vehicles release 50 parts per million sulphur, BS VI compliant vehicles will release only 10 parts per million sulphur.

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