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High capex may boost Indian Oil’s debt: Fitch
Mumbai, July 16 (IANS) US agency Fitch Ratings on Monday said it expects state-run refiner Indian Oil Corporation’s (IOC) net debt levels to increase due to its large capital expenditure and investment plans.
In a separate statement, the American agency similarly affirmed state-run explorer Oil India Ltd’s (OIL) rating at ‘BBB-‘, which is equivalent to its India sovereign rating.
The ‘BBB-‘ rating with stable outlook “equalises IOC’s rating with that of its largest shareholder, the State of India (BBB-/Stable), based on Fitch’s Government-Related Entities (GRE) rating criteria,” Fitch said.
“Fitch expects IOC’s capex to remain high to upgrade refineries to meet new emission standards (BS-VI) and to expand refining and petrochemical capacity, including the expansions currently underway.
“Fitch forecasts average capex of Rs 25,000-30,000 crore per annum over the next five to six years,” it said.
According to the agency, IOC’s financial profile is likely to remain moderate over the medium term due to its high capital expenditure (capex) and investment plans.
The country’s largest oil marketing company (OMC) has reduced its net debt to 2 in fiscal 2017-18, from 2.7 in the financial year 2015-16, due to its higher gross refining margin (GRM) on converting a barrel of crude to petroleum products.
“We expect IOC’s net debt levels to increase due to its large capex plans in the medium term. However, we believe IOC’s credit metrics will remain comfortable with net leverage of around 2.5x over the next two to three years, provided its dividend outflow normalises from the high levels of the last two years,” it said.
“High capex requirements are likely to keep free cash flows negative over the next few years.”
“Fitch assesses the socio-political implications of a default by IOC as ‘very strong’. A default would significantly affect the country’s energy security given IOC’s position as the largest OMC.
“IOC, along with two other state-owned OMCs, imports a large share of crude oil – a default would jeopardise their ability to do so, resulting in disruptions to the economy,” it added.
According to the rating agency, it has assessed IOC’s standalone profile at ‘BB+’ to reflect its dominant market position as the largest oil refining and marketing company in India, the improving complexity of its refining assets and a moderate financial profile.
It said the ongoing refinery upgrades are likely over the medium term to lower the impact of the historical volatility of Indian Oil’s GRMs.
“We also expect IOC to benefit from strong demand for petroleum products in India over the medium term in light of its dominant market position,” it added.
Regarding Oil India, which operates fields in the Northeast region, Fitch affirmed OIL’s long-term foreign currency issuer default rating, senior unsecured rating and the rating on its outstanding senior unsecured debt at ‘BBB-‘.
“The company’s standalone credit profile reflects its strong cost position, with low lifting and development costs, small scale, concentrated operation and moderate financial profile, which offsets its weaker business profile,” the statement said.
Fitch has also affirmed the rating on OIL subsidiary Oil India International Pvt Ltd (OIIPL) at ‘BBB-‘.
“The outlook for OIL and OIIPL is Stable,” it added.
–IANS
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Dr. Abhishek Verma Dedicates a Shelter in Memory of His Mother, Veena Verma, at KGMU; Inaugurated by Daughter Nicolle Verma
World-renowned business tycoon Dr. Abhishek Verma has supported Foodman Vishal Singh’s Hunger-Free World mission. In memory of his mother, Late Veena Verma, who was a 3 term Rajya Sabha MP.
Dr. Verma dedicated a state-of-the-art free permanent shelter for the attendants of patients at KGMU Medical University, Lucknow, under the aegis of Vijay Shree Foundation. His daughter, Nicolle Verma, inaugurated the shelter.
During the event, Foodman Vishal Singh honored Nicolle Verma by presenting her with a memento. Mrs. Nidhi Sharma and Avantika Yadav, associated with the organization, welcomed her with garlands. Following this, Nicolle Verma distributed essential items to the attendants and also handed out fruits. She became emotional remembering her grandmother on her birth anniversary.
On this occasion, she also inaugurated the “Veena Verma Sevalaya” in memory of her grandmother, Veena Verma, to serve the attendants. She expressed, “I feel proud that my family is engaged in nation-building as well as social service. Today, in collaboration with Vijay Shree Foundation founder Foodman Vishal Singh Ji, I feel immensely proud to dedicate this shelter for the poor, helpless, and needy attendants of patients battling serious illnesses like cancer. I am honored to be associated with the Hunger-Free World Mission for humanity.”
Inspired by the continuous humanitarian service provided by Vijay Shree Foundation over the past 17 years, Nicolle Verma donated 10 lakh rupees to support the cause. The purpose of this donation is to ensure that services continue for the needy attendants of patients suffering from severe illnesses in hospitals, as facilitated by Foodman Vishal Singh.
It is noteworthy that Dr. Abhishek Verma’s family has a legacy of public and philanthropic service. They are helping millions to carry forward the values and service work of their parents. On the occasion of his mother’s birth anniversary, Dr. Abhishek Verma dedicated this state-of-the-art permanent shelter at Lucknow Medical College to serve the attendants of patients through the Vijay Shree Foundation.
Supporting Foodman Vishal Singh’s Hunger-Free World mission, Dr. Abhishek Verma assured that he would continually support keeping this flame of humanity alive. He also promised to assist in providing medicines to the helpless patients.
Continuing her grandmother’s legacy of service, Nicolle Verma personally served food to the needy patients and attendants. She said, “It is our good fortune to have received the joy of doing this noble work today through Foodman Vishal Singh. I have taken another step forward in carrying my family’s values and cooperation by joining hands with the Vijay Shree Foundation. My father taught me to serve and help the needy, and I feel happy when I bring a smile to someone’s face.”
On the birth anniversary of the late Veena Verma, the event organizer, Vijay Shree Foundation founder Foodman Vishal Singh, said, “We feel proud and happy that Dr. Abhishek Verma, a globally renowned business tycoon, has extended his support to uplift our country from the hunger index. Today, on his mother’s birth anniversary, he inaugurated a state-of-the-art permanent shelter at Lucknow Medical College, which will always be helpful for the needy attendants of patients. It is a pleasure for me and the organization to receive the affection of Mr. Verma.”
The event was attended by General Manager Verma Family Office Hemant Garg, Sonu Rajput, and the organization’s volunteers, including Sandeep Singh, Parmeshwar Ji, Prashant Rao Gautam, Balram Singh, Ramesh Chaudhary, Suman, Jeetu, Anil, Suraj, Vinay, Manish Bhadauria, Manas Mehrotra, Vivek, Apurv, Happy, and others.