New Delhi: A senior official at BPCL (Bharat Petroleum Corporation Ltd) said that the oil marketing company is looking at cutting its capex for financial year 2020-2021 by 36 percent in order to maintain its debt-equity ratio. Vijayagopal N, Director (Finance) at BPCL, said on Thursday, "We have categorised our projects into minor and major projects. Any project which has an investment of less than Rs 150 crore is minor project and put on hold."
He added that this was a conscious decision taken by the Board because burdening the company with a huge capex at a difficult time will impact borrowing and debt-equity ratio. "It will however not have any major impact on our company's future," the Director (Finance) added.
"As the country was under lockdown, we have not spent much in April and May. We are planning to spend around Rs 8,000 to 8,500 crore for FY21," said Vijayagopal. The company would have otherwise spent Rs 10,000-11,000 crore in FY2020-21. The senior official said that the loss incurred by BPCL in the March quarter has also impacted its expansion plans. "By sheer slowing down of the economy and the lockdown of the country, the project activities will be lower this year. Also because our profitability is bad, we have also taken a decision not to accelerate expenditure on small minor projects up to Rs 150 crore. We are taking up essential minor projects."
The top executive also said that the capex plan is open to review in October and the company will also look to reduce project development costs. "We will take a review in October. We will in October also take a fresh look if renewing contracts and finding more competitive cost structures for expansion is possible," said Vijayagopal.
BPCL posted a loss of Rs 1,819.56 crore in the March quarter of FY2019-20, against a profit of Rs 3,131.66 crore in the year-ago period. The company attributed the depreciation to inventory loss and a fall in gross refining margin.