Chennai: Oil refinery Chennai Petroleum Corporation Ltd (CPCL) Friday said that the Covid-19 lockdown had led to crash in crude prices in the international markets and forced it to write down an inventory of Rs 1,456 crore.
In a regulatory filing, CPCL, which is part of Indian Oil Corporation group, said the lower demand for crude oil and petroleum products had impacted the prices and refining margins of the company.
“Due to the above reasons, our finished goods, intermediates and raw material inventory have been valued at net realizable value/replacement costs as on March 31. This has resulted in significant inventory write down of Rs 1,456 crore,” CPCL said.
According to CPCL, it has scaled down its operations at around 60 per cent and the demand for the products is expected to improve over the next few weeks/months as more and more sectors of the economy are opened up.
“The lower demand and resultant inventory build-up has led to increase in short-term borrowings, which is expected to get normalised based on turnaround in demand situation and stabilisation of international prices of crude and products,” CPCL said.
The company does not expect any significant Covid-19 impact on the continuity of operations on a long-term basis though there may be lower revenues and refinery throughput in the near term, CPCL said.
On Friday the CPCL stock opened at Rs 58.90 and closed at Rs 62.95 on the BSE.