Financial Daily from THE HINDU group of publications
Wednesday, Feb 08, 2006
Financial Daily from THE HINDU group of publications Wednesday, Feb 08, 2006 |
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Corporate
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Investments Markets - Stocks Thru stake sale in ONGC, GAIL — IndianOil plans to retire part of debt Pratim Ranjan Bose
Kolkata , Feb. 7 INDIANOIL PLANS to retire part of its Rs 10,000-crore short-term borrowings from domestic and international market through the first tranche sale of stake in ONGC and GAIL (India) Ltd. The company is expected to mop up close to Rs 3,700 crore by selling part of its stake in ONGC and GAIL through block trade to institutional investors latest by March. If the entire sale proceeds is used in retiring debt, IOC's interest burden would come down by Rs 150-200 crore a year, beginning next fiscal. Sources in the oil major confirmed that the company was geared to retiring its entire load of Rs 10,000 crore of short-term debt by way of selling investments in ONGC and GAIL in tranches. Most of the short-term debt accrued during the current year when crude prices skyrocketed and oil marketing companies suffered because of mounting under-recoveries. For the first time in its history, IOC ended up in the red in the first and third quarters of the year. "Our debt-equity ratio has now gone up to 0.8. If the entire sale proceeds are used to retire debts, the ratio will come down to 0.67. Apart from reducing the interest burden in the immediate future, the exercise would also create greater opportunities for leveraging the debt market to finance our future investment plans," a company official said Timing of first tranche: According to sources, the company may offload the stake in February, preferably before the Budget, to capitalise on the ongoing stock market boom. When asked, Mr. S.V. Narasimhan, Director (Finance), IOC, said, "We are aware of the opportunities available. However, the date of offloading is yet to be finalised."
Related Stories: More Stories on : Investments | Stocks | Oil & Natural Gas Corporation Ltd | GAIL (India) Ltd | Petroleum
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