IndianOil (IOC) to raise borrowing limit

IOC gets investors’ nod to raise borrowing limit

IndianOil (IOC) has got shareholders’ nod to raise its borrowing limit by Rs 30,000 crore to Rs 110,000 crore as the nation’s largest fuel retailer has grown increasingly reliant on debt to meet even its day-to-day expenses. IOC said its shareholders have, through a postal ballot, approved an “increase in the borrowing limit from Rs 80,000 crore to Rs 110,000 crore.”

The company loses Rs 158 crore per day on selling diesel, cooking gas to households and kerosene at government-controlled rates, which are way below their production cost. The revenue deficit on these products is met through market borrowings, a company official said. “We have almost exhausted all of the permitted borrowings and so we went to shareholders for raising the limit,” the official said. IOC, which had in 2008 doubled its borrowing limit to Rs 80,000 crore, currently has a gross debt of over Rs. 78,000 crore. With continued losses, the Company feared borrowings may cross the approved level of Rs 80,000 crore by December.

(Courtesy: The Economic Times, Mumbai, October 22, 2011)