India Ratings and Research has assigned HPCL-Mittal Energy Ltd’s (HMEL) Rs 500 crore non-convertible debenture (NCD) programme a final rating of ‘IND AA—’

HMEL, a joint venture of state-owned Hindustan Petroleum Corp Ltd and Mittal Investment Sarl, is planning to raise Rs 500 crore through a debenture issue to repay a part of its existing loan. It was previously mulling raising Rs 650 crore but has now scaled it down to Rs 500 crore.

“The debentures are unsecured, unlisted, taxable, zero coupon, redeemable and non-convertible in nature. The proceeds shall be used to repay a part of existing sub-ordinate loans,” India Ratings said in a statement.

The rating reflects the high degree of safety regarding timely receipt of payments from the investments that the company has made.

“HMEL will provide a letter of comfort from the sponsors, HPCL and Mittal Energy Investment Pte Ltd (a unit of Mittal Investment Sarl of steel baron Lakshmi Mittal), in favour of the debenture trustee for the proposed NCD,” it said.

HMEL operates a 9 million tonnes a year refinery at Bhatinda in Punjab. HPCL buys almost 80 per cent of the fuel produced at the refinery under a take-or-pay agreement. It sells the products through its retail network in north.

The refinery is being expanded to 11.3 million tonnes capacity.

HMEL is a joint venture between HPCL and Mittal Energy with a 49 per cent stake each in the company and the rest is held by Industrial Finance Corp of India (1.2 per cent) and State Bank of India (0.8 per cent).

Its wholly-owned subsidiary, HPCL-Mittal Pipelines Ltd has set up a dedicated crude receipt and storage facility in Gujarat and a 1,017 km cross-country pipeline for transportation of crude oil to the refinery.

Related Topics