At a time when depressed oil and commodities prices have left companies gasping, the overseas acquisition arm of state-run ONGC has made a killing by replacing a $1.7-billion loan with cheaper credit and longer payback time.

The refinancing would result in a saving of $37 million in interest outgo in five years and give ONGC Videsh two additional years to clear the loan by 2021. "The deal reflects India's economic strength and investors' faith in the inherent value of ONGC Videsh and its projects," company MD Narendra Kumar Verma told TOI confirming the development. The company had taken the five-year loan to fund its acquisition of 16% stake in the Area-1 block of Mozambique's Rovuma basin in 2014.

The loan was in addition to bonds the company issued to fund the deal, India's largest overseas investment in the oil sector. ONGC Videsh had secured the loan at 1.95% interest and is getting it refinanced at 1.5%. The repayment of this loan would coincide with redemption of its euro-denominated bonds raised for the Mozambique deal.

The company would enjoy an advantage due to a Rs 700-crore foreign exchange gain made on the euro bonds. The euro had an exchange rate of $1.36 when the bonds were issued, while it stands at $1.09 at present. A stronger dollar would reduce the amount of outgo during redemption since most of ONGC Videsh's revenue is in the US currency.