Date:21/04/2007 URL: http://www.thehindubusinessline.com/2007/04/21/stories/2007042101420300.htm

Back IOC may get $200-m loan from US private placement market

Our Bureau

Kolkata April 20 IOC may firm up $200 million (approximately Rs 860 crore) 10-year foreign currency loan from the US private placement market by May. This is the company's maiden entry in the US market.

The initiative is aimed at broad-basing the company's loan portfolio and will be directed towards the planned capital expenditure in Panipat, Haldia and Koyali in 2007-08.

Currently, IOC is commissioning a Rs 23,000 crore investment plan for setting up naptha cracker in the proposed petrochemicals complex in Panipat (Rs 14,400 crore) in Uttar Pradesh, hydrocracker at Haldia refinery (Rs 2,900 crore) in West Bengal and upgradation of Koyali refinery (Rs 5,700 crore) in Gujarat.

Higher expenditure

The capital expenditure will increase substantially once the commissioning of the proposed Paradip refinery cum petrochemical complex begins expectedly in 2008-09. The 15-million tonne refinery will require an investment of approximately Rs 25,000 crore.

"Considering that IOC is in the process of firming up major investment proposals in the future, we are trying to reduce our dependence on the syndicated loans from the banks and financial institutions in the Asia and Asia-Pacific," an IOC Official said.

"As part of the initiative we are now testing the hitherto uncharted US private placement market. We have recently made presentations to the institutional investors in the US and are likely to firm up $200 million loan for a comfortable 10-year term within a month," the official said.

According to him, the company's debt-equity ratio has come down to a comfortable 0.75:1 during the second half of 2006-07. The ratio may go up to 0.8:1 following the proposed borrowing from the US.

The average interest cost has gone up by one per cent during 2006-07.