IndianOil capital expenditure set at Rs 14,500 crore for 2010-11
New Delhi   21-Jan-2010
The country’s largest oil marketing company, IndianOil has lined up capital expenses of Rs.14,500 crore for the next financial year. In addition, IOC proposes to float a public issue after government implements a clear policy on fuel pricing after a high-level committee headed by Dr. Kirit S. Parikh submits its report this month. “Our capital expenses next year will be hiked by 10 per cent compared to the present financial year. It will be around Rs 14,500 crore that includes a maintenance capex of Rs 2,000 crore,” Mr. S. V. Narasimhan, Director (Finance), IndianOil, told Financial Chronicle. Internal accruals and funds raised from debt issue will be used to finance these capital expenses, said Mr. Narasimhan. On the other hand, IndianOil has a built up debt of Rs. 47,000 - 48,000 crore largely due to under-recoveries. IndianOil has recently received an overwhelming response from investors for its first ever-overseas bond issue. The company has got offers worth $6.5 billion from international investors for its five year bond issue that marks an over-subscription of 13 times for the issue. Issue size was $500 million. The second-largest refiner also proposes to float a public issue. “Investors’ interest on the oil sector is important, which will come only after the implementation of a clear policy on fuel prices. Even today, our products are not priced properly. They are under-valued. Once there is clarity on price mechanism from the government’s side, we will go for a public issue,” said Mr. Narasimhan. At present, government holds 78.92 per cent in the company and retail investors hold 2.87 per cent. Other state-owned oil companies hold 9.24 per cent, and the balance is with international and national banks, financial institutions, mutual funds and insurance companies. “There are concerns among investors regarding health of the oil companies because due to absence of a transparent fuel mechanism policy,” Mr. Narasimhan said. IndianOil will get Rs. 7,000 crore from the recently released subsidy compensation released by the government for selling PDS kerosene and LPG below market price. “We are closing our accounts for the complete financial year by May-end. We hope more compensation to come. We will again request petroleum ministry on issue of subsidy,” Mr. Narasimhan said.