• HPCL likely to borrow Rs 8,000 cr in FY20 to revamp its refineries: Chairman MK Surana

    Hindustan Petroleum Corporation Ltd, India’s third-largest oil refiner may borrow about Rs 7,000-8,000 crore in FY20 for revamping its refineries at Mumbai and Vishakhapatnam, company’s Chairman MK Surana said in its Q4 FY19 earnings press conference.

    In FY19, HPCL borrowed Rs 6,000 crore, Rs 3,000 short-term and long-term each. A large part of the company’s borrowings go into funding its capex. HPCL’s capex for FY20 is pegged at Rs 14,000 crore, as against Rs 11,000 crore last fiscal.

    HPCL will be investing a total of Rs 5000 crore for its Mumbai refinery and Rs 21,000 crore for the Vizag’s. The investments will happen over a period of time, and also include aligning refineries with the new BS VI regulation norms, with effect from April 1, 2020.

    “It may happen for various instruments. We have got a combination of instruments which we use via foreign currency borrowings and foreign currency bonds, and may do in multiple tranches,” said Surana.

    Surana also shared that as of March 31, 2019, HPCL’s total debt was at Rs 27,244 crore as against Rs 20,991 crore at the end of the previous financial year.

    The increase in debt was mainly due to higher investments in projects and is not a sign of worry for the company, confirmed Surana. He went on to adding, “Our debt-to-equity ratio is quite comfortable, it is not a concern.”

    The company’s leverage stood at 0.97 as of March 31, 2019 as against 0.88 at the end of the previous financial year.

    Surana expects international oil prices to remain around $70-75 per barrel for the next six months provided things remain constant. He predicts oil demand in India to grow by 4-4.5 percent, diesel by 2.5-3 percent, and petrol by 7-8 percent in the financial year 2019-20.

    HPCL Chairman also said that he would like to see the new government consider bringing petroleum products under the ambit of Goods and Services Tax regulation. This way it would help the industry to reap benefits of input tax credit.

    “It (bringing the petroleum products under the GST) will also help in more investments if the new government considers in the GST policy reform…,” he said, adding, “HPCL lost about Rs 400 crore in FY19 for petroleum products not been included under the GST regime.”

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