Workers perform maintenance work on Indian Oil Corp. tanks at Cochin Port in Cochin (Photographer: Dhiraj Singh/Bloomberg)  

Top India Refiner Is Said to Invest $3.5 Billion to Expand

(Bloomberg) -- India’s biggest oil refiner Indian Oil Corp. is planning to invest as much as $3.5 billion in the year beginning April 1, or about a fifth more than the previous year, to expand and upgrade its refineries and boost its marketing network, according to people with knowledge of the matter.

The company plans to use internal resources for the capital expenditure and has no plans to raise loans or issue bonds, the people said, asking not to be identified as they aren’t authorized to speak to the media. Cash generation at all its refineries has improved and even the newest at Paradip in eastern India is likely to report a profit for the first time this year, they said.

Top India Refiner Is Said to Invest $3.5 Billion to Expand

“We cannot comment on the financing because of regulatory guidelines,” a New Delhi-based spokesman for Indian Oil said in an email, while confirming the investment plan for next financial year. “Also, our financial statements are reported on a consolidated basis and we don’t disclose financial performance of any individual unit,” he said, referring to the outlook for the Paradip refinery.

Expansion of refining and marketing capacities is crucial for the refiner to maintain its leading position in the world’s fastest-growing oil consumer. It controlled about 35 percent of the nation’s oil refining capacity and 45 percent of the domestic petroleum-products market in the year ended March 31, 2017. The company is facing competition from private refiners, which more than doubled their fuel retail market share in three years.

Indian Oil is likely to invest about 190 billion rupees ($2.9 billion) rupees on expansion of its refining and petrochemicals capacities, pipeline network and marketing infrastructure in the year ending March 31. The refiner had earlier said it will invest 1.8 trillion rupees over 5-7 years to expand capacity and set up new plants.

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