Indian Oil To Raise Rs 3,000 Crore Via Rupee-Denominated Bonds
An Indian Oil fuel station in Mumbai, India. (Photographer: Vivek Prakash/Bloomberg)

Indian Oil To Raise Rs 3,000 Crore Via Rupee-Denominated Bonds

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The country’s biggest oil firm, Indian Oil Corporation Ltd., plans to raise up to Rs 3,000 crore by issuing rupee-denominated bonds, the company’s Director (Finance) Sandeep Kumar Gupta said on Tuesday.

IOCL will use the funds to meet its general corporate financing needs.

"We plan to raise through a rupee-denominated bond issue up to Rs 3,000 crore. A similar amount may be raised later in the financial year," Gupta said in New Delhi.

The IOCL bond issue will be of Rs 1,000 crore with a greenshoe option to raise another Rs 2,000 crore. “We may retain or not retain oversubscription of up to Rs 2,000 crore,” Gupta said. The bond issue will be of 10-year tenure.

Indian Oil, which had a debt of Rs 81,000 crore at the end of the September quarter, is aggresively expanding its refining and petrochemical capacity and laying infrastructure to meet rising energy demand in the country.

"We had a planned capital expenditure (capex) of Rs 25,000 crore during the current fiscal (2019-20). Of this, about Rs 8,000 crore was spent till August-end and another Rs 1,500 crore would have been done in September," Gupta said, expressing confidence of fully spending the planned capex by March 2020.

The oil marketer, however, is yet to receive Rs 9,700 crore from the government in unpaid subsidises. "The unpaid subsidises are coming down. They were Rs19,000 crore at the beginning of the fiscal and have now come down to Rs 9,700 crore," Gupta said.

Indian Oil has already announced plans to invest Rs 2 lakh crore in the next 5-7 years to expand refining and petrochemical capacities in order to maintain leadership position.

The plan is to almost double its oil refining capacity to 150 million tonne per annum, expand fuel and LPG retailing network, jack up petrochemical production capacity and produce more crude oil and gas.

Also read: The One Thing That Could Save Indian Oil, HPCL, BPCL In The Second Quarter

The company currently is India's largest oil refiner with a group refining capacity of 80.7 million tonnes per annum. It wants to maintain the leadership position by raising refining capacity to 150 million tonne through greenfield and brownfield expansions.

Simultaneously, Indian Oil wants to raise petrochemical production capacity to 13 million tonne from the current 3.15 million tonne. It is expanding the Panipat naphtha cracking capacity and plans to set up new chemical projects in Gujarat, Paradip and Panipat. It has also earmarked Rs 10,000 crore over the next eight years to grow its natural gas retailing business.

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