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Sinking Further

May 17 (LBO) – Petroleum retailer Lanka IOC, Friday reported a 7.1 billion rupee loss for the year ended March 31, as the Sri Lankan government fail to settle its subsidy bills. A unit of the Fortune 500 Indian Oil Corp., LIOCs financial health has been deteriorating since total subsidy claims climbed up to 7.695 billion rupees (from Jan. '05 –Mar '06), after being forced to sell fuel below cost.

Losses during the fourth quarter to March were 37 million rupees, after the oil retailer fully provided 411 million rupees on account of monies from the Sri Lankan government.

"The loss was below our expectations of around 60 million rupees," says Chinthaka Ranasinghe, Head of Research John Keells Stockbrokers.

His sentiments are shared by most analysts who expect LIOC to make a loss of around 6.6 billion if the government fails to settle any part of the mammoth bill.

The government's privatisation arm PERC (Public Reform Enterprise Commission) has contested the validity of LIOC’s claim through a legal opinion from the Attorney General's Dept.

While the company is contesting PERCs opinion, Managing Director K Ramakrishnan is optimistic the funds will be r

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