CHENNAI: The Chennai Petroleum Corporation Limited, a subsidiary of Indian Oil Corporation (IOCL), cemented its turnaround from consecutive years of loss registering a profit after tax (PAT) of Rs 1,029.75 crore for FY17, up 38.8 per cent jump from the year before.
However, despite posting profits for two consecutive years, holding company IOCL sees no way forward for CPCL than a merger with the former.
According to IOCL chairman B Ashok, a standalone refinery company like CPCL could not sustain performance in a volatile crude oil market.
“A company needs to be operational across different segments and products to avoid volatility risk,” Ashok pointed out when asked about the rationale behind merger talks at the annual financial briefing of CPCL. However, while the merger is almost a given, he said that talks are still going on the proposal with other stakeholders.
IOCL holds more than 51.9 per cent in CPCL, followed by Naftiran Intertrade, the Swiss subsidiary of National Iranian Oil Company, which holds a 15.4 per cent stake. Other institutional investors make up the majority of the remaining shareholding. According to Ashok, merger discussions are now being held consistently.
CPCL itself has had to wade through very troubled financial waters in the recent past, even appearing before the Board for Industrial and Financial Reconstruction in 2014-15 due to its net worth falling by half.
However, in 2015-16, it posted a profit, and for 2016-17, the company has posted its second highest profit in history, at Rs 1,029.75 crore. CPCL also announced achieving its highest throughput of 10.256 MMTPA during 2016-17, besides reaching the highest ever distillate yield.
The net worth of the company also grew to Rs 3,314 crore as on March 31, 2017, from Rs 2,603 crore registered as on March 31, 2016, said CPCL managing director Gautam Roy.