The corporation mopped up Rs 500 crore last month through Rs 300 crore bond with a greenshoe option of Rs 200 crore, mainly to meet its capital expenditure for some of its projects in Gujarat.

Corporation officials said the proposed Rs 500 bond issue was intended for making joint venture payments, part-fund its east India refinery project at Paradeep and expansion of Panipat refinery.

Officials, however, declined to give details on the timings of the bonds but said corporation was more inclined to finance its capital requirements through this route than the costlier bank credit.

They said that bank credit even at the prime lending rate would come at about 13 per cent interest whereas it could mop up funds from bonds market between 11 to 12 per cent, officials said on conditions of anonymity.

Theysaid that the bond, likely to be in the second half of the year was likely to be through private placement route.

The officials said that the IOC's bond issue of Rs 300 crore last month was oversubscribed by more than three times to Rs 1000 crore but the corporation retained only an additonal Rs 200 crore through its greenshoe option.

IOC, which made a net profit of Rs 2,214 crore for the year ending March 31 1999, has undertaken an investment plan of Rs 25,000 crore during the current financial year of which projects involving investments of Rs 10,000 crore are underway, sources pointed out.

The first tranche of one lakh non-convertible redeemable bonds issued through the book-building process had indicative coupon rates ranging between 11.25 per cent to 11.75 per cent bonds

For the second tranche of its bonds, IOC is likely to take the services of JM Morgan Stanley and ICICI Seucrities, who had successfully managed the first tranche.

Major projects under implementation by the company are the Rs1,041 crore hydrocracker facilities at Mathura refinery for matching secondary processing facilities, Rs 1,053 crore capacity expansion project at Gujarat refinery to add another 3 million metric tonnes per annum.