Chennai Petroleum Corporation
Ltd (CPCL), a group company of Indian Oil Corporation, said on Friday that it would have to take an inventory write down of Rs 1,456 crore due to Covid-19. The company also said it had scaled down its operations to around 60 per cent.
The company informed the BSE
that international prices of crude and products had crashed on account of demand destruction due to the Covid-19 pandemic and the consequent lockdown from March 25, 2020, in India impacted the business of the company.
Consequently, lower demand for crude oil
and petroleum products had impacted the prices and refining margins of the company.
CPCL said that finished goods, intermediates and the raw material inventory had been valued at net realizable value/replacement cost as on March 31, 2020 and this resulted in a significant inventory write down of Rs 1,456 core.
The company said that it was expecting the demand for products to improve over the next few weeks/ months as more and more sectors of the economy opened up.
The lower demand and resultant inventory build-up has led to an increase in short-term borrowings, which are expected to retrun to normal after a turnaround in demand situation and stabilisation of international prices of crude and products.
While the company expects no significant impact on the continuity of operations on long term basis, it expects lower revenues and refinery throughput in the near term.