IOC to infuse Rs 1,000 crore in Chennai Petroleum

The funds will be used for upgradation and to reduce working capital burden

Chennai Petroleum Corporation Ltd (CPCL), a group company of Indian Oil Corporation (IOC), will raise around Rs 1,000 crore from its parent to strengthen its net worth. This, in turn, is expected to help the company borrow more to complete its Rs 3,110 crore upgradation project to improve profitability.

The capital will also help the company to reduce working capital burden, a company official said.

CPCL has approved the issue of 100 crore Non convertible Cumulative Redeemable Preference Shares of Rs 10 each, in more than one tranche, to IOCL.

CPCL has came under pressure due to global crude prices. The company earlier told the Board of Industrial and Financial Reconstruction (BIFR) that following continuous losses, it could not raise capital from the parent.

 

Howeve conditions have improved since February and gross refining margin (GRM) has also increased to $5.85 a barrel, a company official said.

CPCL posted a net profit of Rs 364.57 crore for the quarter ended March 31, 2015, as compared to the net profit of Rs 49.81 crore for the same period in the previous fiscal year. However, for the full year it incurred net loss of Rs 38.99 crore, net loss of Rs 303.85 crore in FY2014.

Total income dropped by 33.85% to Rs 8,823.98 crore during the last quarter, against Rs 13,339.68 crore in the corresponding quarter last fiscal.

The turnover of the company has come down from Rs 53,923.70 crore during the period 2013-14, to Rs 47,877.82 crore during the same period of previous fiscal year.

Chennai Petroleum's stock price rose 19.98% in BSE on Monday to close at Rs 108.40 a share.