IOC GIFT city unit funds deals of over 250 million dollars

New Delhi: Indian Oil Corporation's GIFT City unit has financed deals worth over $250 million for its group companies in just about a year of operation, helping optimise their borrowing costs, IOC's finance chief said, adding that the unit aims to reach a target of $1 billion in deals in 8-10 months.

IndianOil set up a wholly-owned subsidiary IOC Global Capital Management IFSC Limited (IGCMIL) in Gujarat's GIFT City in 2023 to take advantage of the fiscal benefits, regulatory ease and business opportunities there.

The unit begun its global treasury operation, refinancing ECBs and providing revolving working capital and buyers' credit lines to group entities through a pooling of funds and borrowings from multiple banks, Anuj Jain, director (finance), IndianOil, told ET.


Regulations bar subsidiaries of a non-finance company from lending to each other. A GIFT City unit, which is a finance company, can help by borrowing from the units with surplus and lending to those with funding requirements, he said.

IGCMIL lends to and borrows from group companies both within India and abroad to provide "optimised financing solutions to supplement the present system of going to Indian and overseas financial institutions," he added.

"These financing deals are resulting in interest arbitrage on the one hand and optimising the borrowing cost of group entities on the other," Jain said, adding that the unit can raise funds from banks at rates more competitive than some other operating units of IndianOil. It is raising funds from diverse sources and hedging to mitigate risks and optimise costs.

IndianOil is also leveraging the advantage of the offshore jurisdiction of GIFT City to directly invest overseas. This unit will be the preferential vehicle for all future investments in foreign domiciles, Jain said.

IOC used the GIFT City unit to invest $78.31 million in a new energy company Sun Mobility Pte, Singapore, this year. The IndianOil-Sun Mobility partnership aims to build one of the largest battery-swapping networks in India.