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BPCL Seeks Nod to Double Borrowing Cap to Rs 28,000 Cr

  • Stung by the government’s inability to clear its dues, BPCL is seeking shareholders approval to double its borrowing limit to Rs 28,000 crore, as it estimates that high crude oil prices and under recoveries along with rupee depreciation will force it to borrow an additional sum of around Rs 14,000 crore this year.S Varadrajan, CEO at BPCL told Financial Chronicle that, “Our working capital and other capital expenditure requirements are very huge. But, despite the continuous increase in crude oil prices, which are hovering around $110 per barrel, the retail prices of petroleum products have not been increased. Besides, government has not cleared the dues yet. The delay in compensation has forced us to borrow substantially from abroad.”
  • “We have sought the shareholders approval to increase our borrowing limit to twice the net worth of the company,” he said. State-owned BPCL’s net worth, at present, stands at Rs 14,058 crore. BPCL’s under recovery as of September-end stood at around Rs 31,000 crore. The company has not received any compensation as of now, however, the government has assigned around Rs 7,000 core to BPCL as compensation for the first two quarters for selling fuel such as diesel and kerosene below cost to end consumers.In a filing to the BSE, the company told shareholders that in view of the present scenario, the existing borrowing powers sanctioned by the members would not be adequate. Hence, the company has sought to increase the limit from Rs 2,000 crore over and above the paid-up capital and free reserves, to overall borrowing limit of twice the net worth as per the latest available year-end audited balance sheet. Shareholders will vote on this proposal via postal ballot on January 19, 2012. The results of the poll are expected to be announced on January 25, 2012.
  • The company has a target to invest around Rs 3,000-4,000 crore during the current financial year as part of its capex. “We would need around Rs 15,000 crore over the next four to five years for working capital and expansion projects,” said Varadrajan.The company plans to raise fresh loans of Rs 500 crore to Rs 600 crore during the current financial year. “Our average cost of borrowing on dollar and rupee loans is around nine per cent,” he said.

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