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Oil price cut: OMCs hit, private companies will get hit harder
Oct 08: OMCs are now being forced to take a hit of Rs 1/ litre by the government.
8The absorption could lower EBITDA by as much as 25%
8So far, there has been no word on compensation of under-recoveries on LPG and kerosene. There is a possibility of OMCs, upstream and government bearing a part of the burden.
8The mere return to subsidy regime increases the working capital requirement of the OMCs.
8The government could well be reverting to issuing oil bonds instead of compensating in cash. This may increase the interest cost substantially.
8This is also bad news for both Rosneft controlled Essar Refinery and RIL: a situation may come when they, unable to absorb the under-recovery, may have to shut their retail outlets
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