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Pratim Ranjan Bose

Kolkata , Dec. 12

IndianOil has dropped the plan to tap the bond market to raise finances, with improvement in liquidity owing to fall in crude oil prices from the previous peak.

The company was earlier actively considering issuing bonds as an alternative to diluting stake in ONGC to meet the working capital requirements. IOC currently holds 7.6 per cent in the E&P major and is not considering any further dilution.

"With softening of crude prices, our working capital requirement has come down substantially. The total debt is now ruling within the manageable limit of Rs 26,000 crore. The receipt of first tranche of oil bonds in October has also helped the cause. Accordingly, there is no immediate need for taping the bond market," a senior company official told Business Line.

It may be mentioned that IOC had ended last fiscal with a total debt of over Rs 25,000 crore compared to the Rs 17,000 crore in 2004-05. Short-term borrowing, which had witnessed a spurt in the last two years, was 45 per cent of the total debt in 2005-06. Cost of borrowings has also gone up.

Meanwhile, the oil marketing companies are facing the dual impact of global product price firming up owing to the onset of winter and a reduction in the domestic retail price.

While the retail price of diesel was brought down by Re 1 per litre, global diesel prices firmed up by 60 paise per litre during the last two weeks leading to a net under-recovery of Rs 2.01 per litre. The positive margin in petrol is reduced to Rs 1.55 per litre. Under-recoveries in LPG and kerosene are Rs 132.77 per cylinder and Rs 13.81 per litre respectively.

More Stories on : Outlook | Petroleum | Corporate Bonds

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