The interest costs for the company would be lower by 30-40% in FY15 compared to the last fiscal said B Ashok, chairman, IOC.
Overall, we should have a total under recovery for the year of the order of about the Rs 43,000 to 44,000 crore.
B Ashok
Chairman
IOC
In an interview to CNBC-TV18, B Ashok, chairman, IOC spoke about the positive impact of fall in crude prices for the company.
He feels with the oil prices falling internationally, times are good for the country and the company.
For the company per se, he expects the interest costs for the company to be lower by 30-40% in FY15 compared to the last fiscal. Overall too he expects H2FY15 to be substantially better than H1. In the first half the interest costs for the company fell by Rs 900 crore.
Currently, there are under recoveries only on PDS Kerosene and domestic LPG and no under recoveries on petrol and diesel, says Ashok. Under-recoveries for FY15 are seen at Rs 43,000-44,000 Cr
Although the margin picture for FY15 looks upbeat, the company would have to closely monitor crude oil prices and forex fluctuations for the balance of FY15.
The company is making reasonable profits on petrol and diesel, he adds.
ICO has cut its petrol prices by 91 paise per litre while diesel prices by 84 paise.
Below is the transcript of B Ashok's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: What is the under recovery bill likely to be? How much of a cut will you see in your own subsidy you think?
A: Signs are good certainly for the country and prices have been quite stable in the lower levels. Certainly, there are no under recoveries any more on petrol and diesel that we can talk of.
Currently the under recoveries are only limited to two products which is Public Distribution System (PDS) Kerosene and domestic LPG. Overall we think that for Indian Oil we should have a total under recovery for the year of the order of about the Rs 43,000 to 44,000 crore.
Sonia: As you're under recoveries will fall so much how much will your interest cost go down by the end of FY15? You paid about Rs 5,900 crore of interest in FY14, what could it fall too?
A: If you look at the first half of the year itself actually this is based on the results that we have already announced.
Our interest cost had come down from something of the order of Rs 2,900 crore, it is fallen by about Rs 900 crore during the first half. The second half is only going to be a little better than that because the prices have gone down substantially after that. So, our interest cost should be probably less by at least about 30-40 percent compared to the last year easily.
Transcript to follow
IOC stock price
On December 01, 2014, at 11:10 hrs Indian Oil Corporation was quoting at Rs 362.80, down Rs 1.9, or 0.52 percent. The 52-week high of the share was Rs 410.90 and the 52-week low was Rs 194.50.
The company's trailing 12-month (TTM) EPS was at Rs 41.40 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 8.76. The latest book value of the company is Rs 271.80 per share. At current value, the price-to-book value of the company is 1.33.
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