IndianOil raises Rs 1,400 cr through bonds
New Delhi   17-Dec-2011

Cash-starved public sector refiner IndianOil on Friday said it has raised Rs 1,400 crore from domestic bond market after a gap of more than two years.

“The issue has been placed through book-building route in a coupon range of 9.20 per cent to 9.45 per cent payable annually. The issue, which was launched with an original size of Rs 500 crore, was oversubscribed over three times with the subscription aggregating to nearly Rs 1,600 crore,” the company said in a statement.

The AAA-rated bonds have a maturity of five years with put and call options at the end of the 18th month. IOC has fixed the cut-off coupon rate at 9.28 per cent, which is within the book-building range, the statement added.

The refiner and oil marketing company will spend the funds for capital investments in ongoing domestic projects. At present, IOC has debt of Rs 79,000 crore. This may be reduced by January 2012 if the government transfers cash to the company’s account for compensating under-recoveries, IOC chairman RS Butola said earlier this week. The country’s largest oil marketing company expects to take a hit of Rs 74,000 crore in its books in the complete financial year on account of selling regulated products below market cost.

Earlier in July 2011, IOC had raised $500 million through an overseas bond issue. The issue, finalised through the book building process, was oversubscribed nearly four times. The company had received offers for nearly $2 billion. The bonds were for 10 years tenure.

IOC needs to raise money to meet its working capital expenses because the government is not releasing cash subsidy as promised. At present, it sells every litre of diesel at a loss of Rs 11.51 while it is Rs 28.56 a litre on kerosene. The loss on every domestic cooking gas cylinder is Rs 287.