Chennai Petro writes down inventory of Rs 1,456 cr

Chennai, Indian Oil Group company Chennai Petroleum Corporation Ltd has recorded an inventory write down of Rs 1,456 crore due to the impact of COVID-19 on its operations, the city-based company said on Friday.

In a filing to BSE, CPCL said the international prices of crude crashed on account of poor demand in the wake of COVID- 19 outbreak and the country wide lock-down affected its business operations. The lower demand for crude oil and petroleum products has impacted the prices and refining margins of the company, the company said. “Due to the above reasons, finished goods, intermediates and raw material inventory have been valued at net realizable value/replacement costs as on March 31, 2020.

This has resulted in significant inventory write down of Rs 1,456 crore,” CPCL said. Noting that the operations were scaled down at 60 per cent, the management is expecting demand to improve in the next few months as economy opens up.

The lower demand and resultant inventory build-up has led to increased short term borrowings which is expected to normalise based on turn-around in demand situation and stabilisation of international crude oil prices, CPCL said. The management has assessed the potential impact of coronavirus and expects ”no significant impact” on the continuity of the operations and there may be lower revenues and refinery throughput in near term, it added.