The slump in international crude oil prices is expected to prune the working capital requirement of oil marketing companies (OMCs) in line with the declining value of inventories and receivables.
A study by CARE Ratings forecasts that lower crude oil prices are slated to lead to lower gross under recoveries (GURs) towards liquefied petroleum gas (LPG) and superior kerosene oil (SKO) during FY21. Already, GUR has dropped significantly from Rs 9266 crore in Q1 to Rs 4582 crore at the end of Q3 in FY20.
The combined debt level of OMCs in the public sector stood at Rs 1.42 trillion (as on March 31, 2020), a rise of 39 per cent over the previous year. The debt burden for OMCs is expected to ease during H1 (or April-September) of this fiscal, resulting in improved liquidity position.
