The rupee is currently trading at Rs 59.95 against the dollar A one rupee movement against the greenback increased under-recoveries by around Rs 9,000 crore for oil companies last month.
Oil marketing companies are likely to see a 50 percent jump in under-recoveries in FY14 due to a constant weakening of the rupee, reports CNBC-TV18 quoting sources.
While under-recoveries or sale of petroleum products at government rates stood at Rs 80,000 crore in preceding year, it is expected to touch Rs 120000 in current financial year
Oil firms like Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp import around 70 percent of their oil requirement for which payment is done in dollar denomination. The rupee is currently trading at Rs 59.95 against the dollar
A one rupee movement against the greenback increased under-recoveries by around Rs 9,000 crore. Oil firms have already lost around Rs 22,000 crore in the previous month due to the rupee weakening against the dollar.
With this reality at play, oil companies are even more worried since analysts have predicted that the rupee is likely to remain under pressure in the near term as India runs a high current account deficit of an estimated over 5 percent for the current quarter.
This unfavourable forecast by analysts have added to the worries of oil companies who are currently reeling under losses of around Rs 80,000 crore.
Though crude oil cost is stable at Rs USD 105 per bbl for each barrel Q-o-Q, it will not have much impact on the toplines of these companies immediately. It is only if crude cost continues to fall in the ensuing quarters, oil companies will be able to mitigate losses in the long term, say officials at oil companies.