BackIndian Oil in talks with three overseas banks for more loans
Indian Oil in talks with three overseas banks for more loans
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New Delhi: After exhausting its lending limits with banks raising its debt, Indian Oil Corp. Ltd, the country’s largest oil marketing company, is in talks with Mizo Bank, Bank of Tokyo and BBVA Bank for raising additional loans for its ambitious Rs56,000 crore capital expenditure programme over the next five years.
“We already exhausted our lending limits with the existing banks that we have. What do we do now? We have a huge capital expenditure programme ahead, and for that we need to take loan," said a senior IndianOil executive, who confirmed the names of the new banks but didn’t want to be identified.
The country’s top refiner, IndianOil posted a 52% jump in net profit for the year ended March to Rs7,500 crore.
IndianOil carries a total debt of Rs28,000 crore on its balance sheet.
“Such new banks are being sought as IndianOil has a huge subsidy burden and is bleeding on the cash flow front. The government is showing no signs of taking a long-term view of reducing it," said Prayesh Jain, an analyst at stock market research firm India Infoline Ltd.
IndianOil is already reeling under the effect of surging crude prices and under-recoveries suffered on account of no price increase in the sales of petrol, diesel, kerosene and liquefied petroleum gas (LPG).
The company expects a total under-recovery for the current year of Rs8,500 crore if prices remain the same, and the same current burden-sharing mechanism is in place.
“For our capital expenditure plans, we plan to borrow around Rs25,000 crore by 2012," the executive added.
“Had free-fuel pricing been allowed, we would have been a zero-debt company," Sarthak Behuria, chairman and managing director at the oil company, had earlier said.
A substantial portion of this capital expenditure will go towards expanding its refining and other programmes.
The company wants to expand its refining capacity from 60.2 million tonnes per annum (mtpa) of crude to 76.7mtpa.
It also plans to invest around Rs3,000-5,000 crore to increase its pipeline capacity to 75mtpa from the existing capacity of 61.72mtpa.
utpal.b@livemint.com
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