ONGC Videsh to raise upto Rs 5,000 cr via debentures to fund capex, assets

Public sector enterprise ONGC Videsh (OVL) plans to raise up to Rs 5,000 crore through non-convertible debentures (NCDs) for funding capex, refinancing and operations.

OVL, a wholly-owned subsidiary and the overseas arm of Oil and Natural Gas Corporation Limited (ONGC), also plans to mop up another Rs 5,000 crore through commercial paper, a money market instrument, to meet its short-term financing needs.

ONGC has guaranteed all of OVL’s outstanding debt of Rs 38,200 crore for FY23.

The operational linkages are driven by companies operating in the same segment, with OVL being essential to ONGC for providing ownership in international oil and gas-producing assets.

It had a stake in 32 oil and gas projects across 15 countries, including Azerbaijan, Bangladesh and Brazil as of April 1, 2023.

Rating agency India Ratings has assigned “AAA” to the proposed NCDs and an “A1+” rating for commercial paper.

Given the company’s overseas operations, OVL’s entire loan book is foreign currency (FC)-denominated.

However, it is presented in rupee terms for the consideration of the balance sheet and communication.  

The total debt consisted of foreign currency bonds worth Rs 11,170 crore and term loans to the tune of Rs 27,020 crore at the end of September 2023. 

A bulk of the debt addition in OVL takes place at the time of a major acquisition, while the ongoing capex and operations are managed by internal accruals and debt refinancing, the rating agency said.

OVL typically takes these bonds/loans for five-to-10 years having bullet maturities.

It has repayments of around Rs 19,600 crore in FY25.

Of the repayments of dues, Rs 4,400 crore is in FY24.

The company has already refinanced loans of Rs 4,140 crore in May 2023 and repaid the balance from internal accruals.  
 

OVL is poised to tap into the bond and loan markets owing to its market position.