Rising under-recoveries coupled with delays in subsidy payment from the government have deteriorated the liquidity position of the three state-run oil marketing companies: Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation (BPCL). This has resulted in the maharatnas borrowing from the market at high-interest costs in order to meet working capital and capital expenditure requirements.
As on March 2019, the combined borrowings of the three PSUs stood at a whopping Rs 1.35 lakh crore, up 38.3 per cent from Rs 97,968 crore a year ago, cranking up their debt-to-Ebidta ratio to 2.5 times from 1.7 times in FY18.
