IOC could run out of cash by September

29 May 2008 13:15  [Source: ICIS news]

MUMBAI (ICIS news)--Indian Oil Corp (IOC), which is losing Indian rupees(Rs) 3bn ($70m) a day, might run out of cash by the end of September if the government does not step in with preventative measures, a company official said on Thursday.

“The company faces acute liquidity crunch that forced it to apply for shareholder’s approval for raising its borrowing limit to Rs800bn from the current Rs500bn,” he added.

IOC expects corrective measures to be issued by central government but if it does not step in then the company may have to sell its stake in other firms to raise cash to continue operations, he said.

IOC holds 7.69% stake in India's Oil and Natural Gas Corp (ONGC) worth about Rs144.4bn and 2.41% stake in GAIL (India) Limited worth around Rs8.16bn.

“Although we expect the government to step in with corrective measures, selling our investments in ONGC and GAIL would be our last resort,” he added.

“We would continue our refining activities and money would be spent to buy crude. We can sustain a domestic diesel demand growth up to 10-12% until September end,” he added.

The liquidity crunch has forced the company to put on hold all its expansion and growth projects.

($1 = Rs42.63)

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By: Isha Jha
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