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State-owned oil refinery company Chennai Petroleum Corporation Ltd on Friday said, ‘It has recorded an inventory write-down of Rs 1,456 crore due to the impact of coronavirus on its operations.”
In a filing at BSE, CPCL said, “The International price of Crude Products crashed on account of demand destruction due to the COVID-19 pandemic situation and the consequent lockdown from 25″ March 2020 in India impacted the business of the Company.”
“Consequently, lower demand for crude oil and petroleum products has impacted the prices and refining margins of the company. Due to the above, our finished goods, intermediates, and raw material inventory have been valued at net realizable value/replacement costs as of 31st March 2020. This has resulted in a significant inventory write-down of Rs 1456 Crore,” the company said.
“Noting the company is continuing with scaled downed operations at around 60 percent. The management is expecting the demand to improve in the next few weeks/months as more sectors of the economy are opened up,” the company in its filing added.
“The lower demand and resultant inventory build-up have led to an increase in short-term borrowings which is expected to get normalized based on a turnaround in demand situation and stabilization of international prices of crude and products,” Chennai Petroleum said.
Further adding to the statement, the company in its filing added, “Management has assessed the potential impact of COVID-19 based on the current circumstances and expects no significant impact on the continuity of Operations of the business on a long term basis/ on the useful life of the assets/ on the financial position, etc. though there may be lower revenues and refinery throughput in the near term.”