Feb 10 (LBO) – Lanka IOC, a unit of Indian Oil Corporation, may have to re-state their published accounts if the Sri Lankan government does not pay the full amount of the money claimed as subsidies, a top official said. The company is claiming sales of Rs.17.5 billion for the six months ended September 2005, where it recognises revenue based on a price formula contained in an agreement with the government.
Since the Sri Lankan government is disputing LIOC’s subsidy, both the published revenue and profit numbers of the company are now in doubt.
“Our accounting practices are based on the accrual basis, with the subsidy receivable getting accounted as sales revenue,” says LIOC Managing Director K Ramakrishnan.
“In the balance sheet it appears under the receivable column. We are following that. Now that it is being disputed, based on the different view that is finally accepted by both parties, then with the consent of the board we may have to re-state our accounts.”
LIOC says the Sri Lankan government owes them Rs.7.4 billion for selling fuel below world market prices in the retail market.
The company is claiming profits of Rs.513 million for the half-year ended September 2005, which is sharply down