Tuesday, May 02, 2006

Oil companies - Making losses or PROFITS

Regularly, we hear the hue and cry from oil companies making losses and their demand to increase petrol/diesel prices. Especially, oil PSUs take front stage in this rally to increase prices of petro products. Making losses is a very ugly reason to raise prices in a competitive business. When private players can afford to make huge profits without raising prices, it's a matter of shame for the PSUs to beg for their alterations.

The issue lies not in prices but unnecessary operating expenses lavished by careless government officials. It's not the prices but the system and culture prevalent in these companies that requires change. Our largest refining and marketing company IOC, controlling 50% of the country's diesel market and 45% of the petrol market reported a loss in the third quarter. For the first nine months of FY06, net profit stood at Rs. 890 crore against a net profit of Rs. 3,998 crore for the same period in FY05. Company's director marketing, NG Kannan said,
"Indian Oil will lose Rs 5,000 crore on the sale of petroleum products, even
after taking into account government subsidies, oil bonds and cross-subsidy
payments by upstream oil companies."

Private players like Reliance, spearheaded by Ambanis have shown impressive growth in the same period eating into IOC's market share. Despite of constant pressure being put on the Govt. for price raise, I have never seen any negative figures in their balance sheets. Is this cry only fictitious to make more internal profits for the babus to enjoy? If it is real, then Govt. should insist on them following efficient, sound and proven practices to cut-cost, while learning lessons from private companies.

1 comment:

mz6ubwe60nv said...

While you read this, YOU start to BECOME aware of your surroundings, CERTIAN things that you were not aware of such as the temperature of the room, and sounds may make YOU realize you WANT a real college degree.

Call this number now, (413) 208-3069

Get an unexplained feeling of joy, Make it last longer by getting your COLLEGE DEGREE. Just as sure as the sun is coming up tomorrow, these College Degree's come complete with transcripts, and are VERIFIABLE.

You know THAT Corporate America takes advantage of loopholes in the system. ITS now YOUR turn to take advantage of this specific opportunity, Take a second, Get a BETTER FEELING of joy and a better future BY CALLING this number 24 hours a day.
(413) 208-3069