Equity sale will slash debt: IOC
New Delhi   07-Sep-2010

The IndianOil has indicated that the government’s plan to dilute 10 per cent stake will help the company reduce debt and execute the planned Rs 50,000 crore worth of projects without much of hassle over the next five years.

“While the IOC stake dilution is the recent development, the subject was under discussion for some time and this a welcome move. By this process, IOC would like to float IPO equity and in the process it will increase our resources and our debt can come down,” BM Bansal, chairman, IndianOil said here at the annual general meeting of IOC’s group company Chennai Petroleum Corporation.

“We are planning about 10 per cent dilution and this fund will mainly be used for our ongoing projects worth about Rs 50,000 crore over the next five years. The money that will be raised through the issue will help execute these projects without going for much of debt from banks and financial institutions,” he added.

The borrowings of the IOC were Rs 44,566 crore as on March 31, 2010 as compared to Rs 44,972 crore as on March 31, 2009. The total debt to equity ratio as on March 31, 2010 worked out to 0.88:1 as against 1.02:1 as on March 31, 2009 and the long term debt to equity ratio stood at 0.36:1 as March 31, 2010 against 0.36:1 as on March 31, 2009, according to company's latest annual report.

IOC's key investment areas over the next five years include new grassroots refinery besides capacity enhancements in refining, pipeline and marketing networks.