Financial Daily from THE HINDU group of publications
Sunday, Mar 03, 2002
Financial Daily from THE HINDU group of publications Sunday, Mar 03, 2002 |
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Investment World
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Petroleum Industry & Economy - Petroleum Oil: Slippery terrain
THE dismantling of the administered price mechanism is expected to have a favourable impact on the marketing margins of the oil companies — Indian Oil Corporation, BPCL, HPCL and IBP. By increasing the Customs duty on kerosene from 8 to 16 per cent, the Finance Minister, Mr Yashwant Sinha, may have inadvertently given cause for joy to refining companies whose protection levels will now increase correspondingly. The refining margins of IOC, BPCL and HPCL as far as kerosene goes is likely to improve following the duty imposition. The decision to convert the outstanding amount in the Oil Pool Account into bonds is a mixed blessing. While it guarantees the return of money from the Government, it also imposes near-term pressure on the working capital position of the oil companies. They may now have to borrow more from the market to compensate for the loss of cash flows due to the conversion of outstandings into bonds. The complete impact of the deregulation will unravel as the Government dismantles the control structure. PSU disinvestments: The announcement of a Rs 12,000 crore target from divestment proceeds next fiscal may keep the stocks of public sector companies buoyant in the market. The privatisation programme seems to have found its right mentor in Mr Arun Shourie, Minister of Disinvestment, to whom maximum credit should go for the spate of successful privatisations this fiscal. With big-ticket privatisations of companies such as BPCL, HPCL, Maruti Udyog, Neyveli Lignite Corporation, Shipping Corporation of India, Indian Petrochemicals Corporation and Hindustan Zinc lined up for the next one year, there remains little doubt that PSU stocks, including those named above, will catch market fancy in the near term.
BL Research Bureau
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