Taxation-Hunt for Incentives

November 27, 1971 The throughput of crude at its three refineries was only marginally higher than in 1968-70 (6.34 mn tonnes against 6.25 mn tonnes). Sales rose by about 9 per cent (from 10.64 mn kls to 11.65 mn kls), the result of larger production at the (public-sector, but non-Indian Oil) Cochin and Madras refineries and somewhat larger imports. Profit after depreciation was noticeably lower at Rs 15.77 crores compared to lis 20.41 crores in 1969-70. This is attributed by the corporation to increase in the price of crude which raised crude costs in 1970-71 by Rs 5 crores (Rs 2.5 crores on account , of crude processed during the year and the balance retrospectively for earlier years). Against this the change to refinery- based pricing of petroleum products recommended by the Shantilal Shah Committee saved Indian Oil Rs 3.9 crores by way of reduction in under- recoveries on various counts. The director's report claims, however, that this entire saving was wiped out by the reduction effected by the-Committee in selling margins. The dividend on capital payable to the government is being maintained at 7 per cent. While this is a higher rate of return . than what the government gets on most of its investment in public sector enterprises, it is still low not only by the standards of the petroleum industry but also in relation to the minimum return on capital prescribed by the Planning Commission for public enterprises. The chairman, however, points out that the corporation has generated internal resources totalling almost Rs 120 crores and that the Haldia refinery, estimated to cost Rs 68 crores, is being financed "to a very large extent" out of the corporation's resources.