ONGC Mangalore Petrochemicals (OMPL) plans to raise $510 million (Rs 3,600 crore) through a foreign currency term loan, maturing July 2027, with a moratorium of three years for repayment.
India Ratings and Research (Ind-Ra) has assigned an ‘AAA/stable’ rating. It says this was done after considering OMPL’s strong operational and strategic ties with its sponsors, Mangalore Refinery and Petrochemicals (MRPL, 51 per cent stake) and Oil and Natural Gas Corporation (ONGC, 49 per cent). ONGC actually holds 71.6 per cent of the equity, the rest from its stake through Hindustan Petroleum Corporation in MRPL.
These linkages between OMPL and its parents are strong and likely to remain so during FY20-21. In FY19, both MRPL and ONGC infused equity of Rs 300 crore (including Rs 50 crore as securities premium) in OMPL. An additional Rs 500 crore (including Rs 80 crore as securities premium) was infused in June.
Recently, the board of ONGC and MRPL also approved the issue of compulsorily convertible debentures of Rs 1,200 crore. These have a
put option on both promoters as a back-stop arrangement, likely to be executed in the current quarter).
As for the $510-million term loan, there would be no repayment, as noted earlier over FY20-22. External commercial borrowing repayment would be Rs 330 crore annually over this period. Despite equity infusion, OMPL’s short-term loans are high. This is partly due to funds being utilised for working capital in the first half of this financial year and on account of rupee depreciation.
OMPL’s total debt at end-September was Rs 6,370 crore. This comprised ECB of Rs 900 crore, foreign currency short-term loans of Rs 760 crore, foreign currency medium-term loans of Rs 2,000 crore and other short-term loans of Rs 2,700 crore.