Skip to main content

Puzzle of OMCs


A Perspective

I have NEVER EVER understood how can these Oil Marketing Companies (OMCs) like IOC make such terrible losses. For a public sector company to loose $4billion - Rs22,450Crs - on a quarter - of TAXPAYER's money is absolutely terrible.

Simply put, for the 110 Crore citizens of India, IOC just lost Rs204 for each and everyone of us! Thats Rs250 crores per day!!

I agree there is a lot of subsidy burden on the company and that is something that has to be unfortunately socialised. Fine. But what makes you sure that all of the above losses are purely based on subsidies?

Is it possible that their procurement programs are not efficient? Or is it possible that they can increase production efficiency in their refineries? Or is it possible that there are thefts, spliiage and loss of their inventories? 

How is it that their biggest ever loss comes at a time when oil is heading down? Agreed, they may have booked it forward. So does that mean going by the lower oil prices in current quarter IOC or other OMCs will show a good / stellar results in next quarter? Or will they still blame the crude prices, fluctuations, USDINRs etc.

Are we all to make payments and backstop a public companies' inefficiencies? Do we even question how these companies are being run?


I accept these guys are having a terrible time. But if these guys are have such horrible revenue slippages when USDINR is at 55-56 and oil at $85-95, how under the heaven will they react in the extremes of $200 oil or USDINR at 80?

Importantly, are they learning anything? Are they contracting for lower cheaper oil? Are they working on efficiency of their plants, transportations and inventories? Or is all our money going waste?

I am not even touching upon the subject of under-recoveries (yes, that voodoo thing!)

Comments

Post a Comment

Popular posts from this blog

Cognitive rules of business presentations

In his recent book, Clear and to the Point, Kosslyn explained that the four rules of PowerPoint are: The Goldilocks Rule, The Rudolph Rule, The Rule of Four, and the Birds of a Feather Rule. Here's how they work. The Goldilocks Rule refers to presenting the "just right" amount of data. Never include more information than your audience needs in a visual image. As an example, Kosslyn showed two graphs of real estate prices over time. One included ten different numbers, one for each year. The other included two numbers: a peak price, and the current price. For the purposes of a presentation about today's prices relative to peak price, those numbers were the only ones necessary. The Rudolph Rule refers to simple ways you can make information stand out and guide your audience to important details -- the way Rudolph the reindeer's red nose stood out from the other reindeers' and led them. If you're presenting a piece of relevant data in a list, why not mak...
Post a Comment
Read more

Monetary inflation, Spiritual devaluation

Its been sometime I have been trying to make some special people understand the evils of inflation. Inflation is an abstract subject most of us dont know about, let alone understand the technicalities amidst jargons. I have in my previous post have briefly touched the social part of inflation but never in a concentrated way. I understand what my friends mean when they say "tell me in layman’s language." It is not a heartening sign, that they avoid technicalities. But it could well be that knowing where they stand, their role and understanding the social changes in the light of inflation may motivate them to understand the term "inflation." This is just to highlight the brief points. First and the foremost, is there any link between inflation numbers and society. Yes. The relation is same as the relation between society and money. What is money? Money is an easy means of exchange. If I am selling my horses to a pig-farmer and I am not interested in taking pigs in ret...
2 comments
Read more

Unprecedented External Demand Shock Underway

India’s export growth averaged 24.8% over the last three years, driven by strong global growth. However, over the last three months, export growth has decelerated sharply. While until recently the strong demand from emerging markets including Latin America, Emerging Europe, the Middle East and Africa ensured that export growth remained healthy, over the last three months disruptions in the macro environment of these economies have been evident. Apart from weakening demand, exports have also been affected by the lack of availability of foreign trade credit and inventory liquidation. India’s exports declined by 12.1%Y in October 2008 compared with 10.4% in September and 26.9% in August. While we expect some improvement in the second half of 2009, exports are likely to be unusually weak over the next six months. We now expect exports to decline by 5.3%Y in 2009 compared with 12.7% in 2008 (estimated) and 23.1% in 2007 Excerpt source
Post a Comment
Read more