Last year, INA made a net profit of HRK 958 million, and on 30 March, the company' supervisory board approved the management's suggestion that the profit be fully distributed in reserves and retained profit.
However, the Croatian government last Saturday entrusted representatives of the state sitting on the boards of companies in which the state holds shares and which operate at a profit, with setting aside part of the profit for the payment of dividends. In this context INA was mentioned.
MOL holds a 47.26-percent interest in INA and the government has 44.84 percent.
Responding to enquiries about the supervisory board's decision and the government's proposal, INA executives said that the supervisory board okayed the management's decision to retain the profit, but that it was up to share-holders to make a final decision at their general meeting.
MOL said in a statement on Wednesday that it "proposes to retain INA's 2010 profit and utilize it for further investments".
"INA made an excellent job last year by making a strong profit after many years of serious loss making. We strongly believe that this profit should be used for the future and not for today. The right thing for INA and for INA shareholders now is to increase the value of the company by pursuing further necessary investments and developments, " MOL spokesman Domokos Szollar said in the statement.
"In 2010, full repayment of overdue liabilities towards the Croatian State and suppliers required INA to significantly increase its debt level and gearing, above the level sustainable on longer term. By retaining profits INA would be able to reinforce its financial position by reducing indebtedness," reads the statement.
"In spite of the economic crisis INA continued its investments programs and from 2008 INA together with MOL spent more than HRK 12 billion on investments. The results of heavy investments already visible in better operating results. During the first quarter of 2011 key investment programs including the upgrading of Rijeka refinery, Hayan project in Syria are being completed."
Szollar was quoted as saying that "owing to the situation on the Middle East, where currently an elevated level of risks can be experienced, INA needs to carefully analyze its cash generation which partially depends on this region.”