“About $500 million (of Rs 15,000 crore) could be raised through foreign currency loans and bonds, likely in February-March, by when another round of Fed rate cut could make foreign borrowing more attractive,” Anuj Jain, director (finance), Indian Oil Corporation, told ET, adding that if the interest rate is attractive, the company could raise as much as $1 billion in foreign currency loans.
A declining interest rate trend in the US is prompting Indian companies to consider overseas borrowings, although the depreciating rupee presents a risk and pushes up the hedging cost.
The company will “focus on having borrowings of a longer duration in order to have a balanced mix”, Jain said, adding that the tenure for the planned Rs 15,000 crore debt could be three to five years.
The planned borrowings will push up debt of IndianOil, the nation’s largest refiner and fossil fuel retailer, to Rs 147,000 crore by March-end from Rs 132,000 crore at present, Jain said. At the beginning of this fiscal, the company’s debt was ?116,500 crore, lower than Rs 132,500 crore a year earlier. Strong profits in 2023-24 had reduced the refiner’s debt, which is again climbing up.
“High borrowing this year is mainly due to lower profits and the need to fund the capex of about ?35,000 crore this fiscal year,” Jain said. “Borrowings may be lower if there is improvement in cash flows and internal accruals.”The company’s losses on account of selling liquefied natural gas (LPG) below market price to households had accumulated to Rs 8,870 crore by September-end.
