Pritesh Shah Profile picture
Oct 4, 2018 7 tweets 3 min read Twitter logo Read on Twitter
Deregulation of OMCs is only on paper: Govt backtracks, asks OMCs to absorb Rs. 1 / liter cut in fuel cost
This move will cost OMCs Rs. 7000 crores in their books.Their profits would stands reduced to 32,600 cr (from 39,600cr FY’18) or 17.7% fall in the profits.

This move will cost OMCs Rs. 7000 crores in their books. Their profits would stands reduced to 32,600 crores (from 39,600 crores, FY’18) or 17.7% fall in the profits.

Govt will have lower collection of revenue by 10,500 crores as they cut the duty by 1.50 / liter
Asking OMCs to pay for costs of higher fuel prices is nothing short of bringing back of regulations of managing OMCs.

OMCs are public listed cos and they have other shareholders as well.
How can the Govt act against the interest of shareholders & investors by unilaterally taking decisions?
Did they ask the management and other shareholders of OMCs before taking this move?
Should Government run the management of public listed cos and interfere in their business?
Govt’s move has eroded d market wealth of investors of OMCs by: 32,000Cr,
Rather than asking OMCs to take the hit of 7000cr,should they not ask states to change the mechanism of charging duty 4m ad-velorum to fixed basis*?
Why not the states be asked to operate on lean cost structure ?

Markets are not happy with the arbitrary decision making process of the government. Investors will think as many times before investing in PSUs in future.

With this move, Govt is closing down options for divestments from PSUs. No serious investor will ever trust Govt if they go back on their commitments!

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