OIL to offload 10 pc through IPO; Govt to disinvest 10 pc

New Delhi, Aug 30 (UNI) The government today announced that Oil India Ltd would go for a fresh equity issue of 10 of its paid up capital through initial public offer (IPO).

Simultaneously, the government would disinvest 10 per cent of OIL's paid up capital in favour of the three Oil Marketing Companies (OMCs) -- IOC, HPCL and BPCL in the ratio of 2:1:1 respectively.

The decisions were taken at a meeting of the Cabinet Committee on Economic Affairs, Finance Minister P Chidambaram told reporters.

Assuming that the IPO fetches Rs 600 per share, the company would mobilise Rs 1,428 crore, the Minister said.

The divestment in favour of three OMCs would not only strengthen their existing synergies but would also help them to raise resources by disposing these shares in the open market at an opportune time to tide over their under-recoveries, he said.

The IPO would enable the company to get listed on the stock exchanges.

CCEA has also approved the proposal for issuing of additional one per cent of its paid up capital to the employees of OIL. The price/band/floor price and offer price to be approved by the EGoM constituted to decide the price for the sale of Government shares.

The fresh issue of 10 per cent of its paid up capital would meet SEBI's requirement of listing of the Company's share on the Stock Exchanges.

This would not only make OIL more amenable to market discipline but would also boost the company's image. Besides, it would help OIL to raise resources for its future expansion and growth. The additional one per cent allocation for its employees would motivate them towards better performance.

The proceeds of divestment of Government holding in favour of IOC, HPCL and BPCL would be used for meeting the needs of social sector programmes as also for the capital investment needs of revivable CPSEs.

The IPO would take time as it would be done after road shows and other formalities, Mr Chidambaram said in reply to questions on the time-frame for the exercise.

UNI