Indian Oil Corporation Ltd (IOCL), India’s largest oil marketing company, is planning to raise its borrowing limit by 50% to ₹1.65 trillion from ₹1.1 trillion and has sought shareholders nod for the same. IOCL’s sales collection nosedived during the last week of March due to the COVID-19 induced nationwide lockdown, while it continued to make the payment for crude oil supplies as per the contractual terms, the company said in its annual report.
“The internal accruals have remained muted during 2019-20 mainly on account of large inventory losses coupled with subdued margins in refining as well as in petrochemical segments,” said IOCL adding that the company is going through a phase of expansion and upgrading its infrastructure facilities across business segments viz. refining, pipelines, marketing, petrochemicals and natural gas.
“The prevalent global crisis due to the COVID-19 extended the countrywide lockdown during April and May 2020 and has adversely impacted the business of the company,” said IOCL.This, the company said, led to elevated working capital requirement during the lockdown.
“Considering all the factors mentioned above, it is proposed to increase the borrowing limits earlier approved by members to the level of ₹1,65,000 crore, from the current level of ₹1,10,000 crore to enable smooth operation of the Company,” said IOCL. IOCL incurred a capital expenditure of over ₹29,000 crore during the year 2019-20, which is about 113% of the overall capex target.
The board of the company has approved an investment proposal of ₹8,410 crore for city gas distribution projects in nine Geographical Areas (GAs) awarded to the company by petroleum and natural gas regulatory board (PNGRB)) as part of the 10th round. With this, the company’s total capex in CGD business will be ₹ 13,873 crore in 17 GAs over the next eight years.
IOCL will hold its 61st annual general meeting on 21 September through video conference.