Moody's Investors Service warned about the record high level of borrowing of State-run refiner Indian Oil Corp and said its debt partially offset the improvement in margins of the company during October-December 2012 quarter.
The company's borrowings at end-2012 increased to Rs 94,900 crore as against Rs 75,400 crore as of March 2012.
The company had to resort to short term borrowings because of the net under-recoveries and delay in the payment of compensation by the government.
The gross refining margins (GRM) of the firm rose to $6.15 per barrel during the quarter from $5.15 a barrel in the previous quarter and $4.31 per barrel in Oct-Dec 2011.
The improvement in IOC's gross refining margins in Q3 is from the higher regional refining margins and from gains on inventory valuations, Vikas Halan, Moody's Vice President and Senior Analyst said.
Thus, IOC recorded its best quarterly results this fiscal year, posting stronger refining margins, refinery throughput, pipeline throughput, total sales and normalised EBITDA when compared with its Q1 and Q2 results and also versus its Q3 results last year, Halan said.
But Moody's expect that the firm's borrowings would decline with the subsequent disbursements by the government. But it will still be meaningfully higher than the March 2012 level, it said.