IndianOil plans80% increase in capital expenditure in 2008-09

IndianOil plans to increase its capital expenditure by almost 80% to Rs 8,500 crore in 2008-09, from capex of Rs 4,500 crore for the current fiscal. The investments will increase further to Rs 10,000 crore in 2009-10. The projected investment outlay does not include upstream and downstream acquisition opportunities pursued by the company. The proposed investments in Turkey will be made through a SPV and is not included in the capex budget. Apart from the ongoing major projects at Panipat and Koyali, IOC will start commissioning of its 15 mt Paradip refinery-cum- petrochemicals project in 2008-09, and commence construction of the Paradip refinery-cum-petrochemicals project by April-May. Board approval may also be sought to set up paraxylene unit at Haldia. Projects are also lined up for upgradation or modernisation of Mathura, Barauni and Haldia refineries. Apart from increasing its refining capacity, IOC is making an attempt to increase the use of cheap high sulphur crude and increasing the yield thereby, ensuring higher refining margin. Both its refineries at Panipat and Haldia are being expanded, as the petrochemicals projects will allow gainful use of higher quantities of naphtha to be produced by IOC refineries. IOC is currently limiting its total borrowings at a band of Rs 28,000-30,000 crore. Borrowings will increase in the next two years to part finance higher capital requirement. The company is targeting 20% increase in net profit for next few years to ensure adequate internal accruals.
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