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Heavy Inventory Losses may Paralyse Balance sheet of Oil Refinery Companies

News

The Ruias-controlled Essar Oil Ltd, which operates a 20 million tonnes per annum (mtpa) refinery at Vadinar in Gujarat, on Monday said stand-alone net profit for the March quarter fell 45% due to heavy inventory losses.

Source:  Mint

SNP Insights

Oil Refinery Companies are facing huge inventory losses with more than 90% slump in oil prices between FY13-14 & FY14-15. As international oil market is very much dynamic in nature, in order to curb this, company must indulge themselves in effective market analysis & come out with proper hedging mechanism, to minimise the losses. A duely articulated Forward Contract can reduce the losses to a large extent.

Source: SNP Infra Research