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The Government may even consider an ADR/GDR offering for the stake sale if the domestic market does not have the appetite to absorb the issue.

New Delhi , Dec. 24

THE unlocking of cross-holdings of Indian Oil Corporation, Oil and Natural Gas Corporation and GAIL (India) Ltd in each other may have to wait till the Government sells 10 per cent of the total equity each in ONGC and GAIL in the domestic market through the book-building route.

The book-building route has been approved by the Cabinet Committee on Disinvestment (CCD).

Fearing that a slew of public issues that are slated to hit the market soon may depress its absorption capacity, the Government on Wednesday said that the sale of 10 per cent equity each in ONGC and GAIL would be taken up first followed by the cross-holdings later.

IOC and GAIL together hold 12 per cent of ONGC equity, ONGC and IOC 10 per cent of GAIL, while ONGC hold 10 per cent of IOC equity. The CCEA had last week allowed the oil PSUs to sell these cross-holdings in the market.

``We will do the 10 per cent stake sale in ONGC and GAIL first and take up the cross-holdings proposal later. The Ministry has started work on appointing financial advisors for the equity sale in ONGC and GAIL,'' the Disinvestment Minister, Mr Arun Shourie, told presspersons here.

"We are making our best attempts to complete the stake sale in ONGC and GAIL within the next three months", he added.

If the domestic market is not able to absorb the entire issue in one go, the Government may consider splitting the issue into two tranches of 5 per cent each. "In that case, we may put 5 per cent now and another 5 per cent later. The exact quantum of equity to be sold and the timings will be decided by the inter-ministerial committee comprising the Ministers of Disinvestment, Petroleum, Finance and Law based on the suggestions given by the financial advisors to the sale", Mr Shourie said.

The Government may even consider an ADR/GDR offering for the stake sale if the domestic market does not have the appetite to absorb the issue. But, this would require a fresh CCD approval since the Tuesday decision was to offer the equity in the domestic market only.

The proportion of shares to be issued to foreign institutional investors, domestic financial institutions and retail investors during the stake sale will be governed by the Securities and Exchange Board of India (SEBI) guidelines on the matter.

SEBI had fixed a 60:40 ratio for institutional investors and retailers. But, this ratio was reversed in the case of Maruti Udyog Ltd's public offer where 60 per cent of the shares were offered to retail investors and 40 per cent to institutional investors.

"In the case of ONGC and GAIL public offers, a decision on reversing the proportion will be taken closer to the issue", Mr Shourie said.

At prevailing market prices, the 10 per cent stake sale in ONGC and GAIL is expected to rake in about Rs 12,500 crore, helping the Government meet the disinvestment target of Rs 13,200 crore for 2003-04 substantially.

Mr Shourie said that the domestic offering in ONGC and GAIL was taken to circumvent the setback arising out of the Supreme Court verdict on HPCL and BPCL which has brought the entire disinvestment process to a halt, affecting the Government's ability to meet the disinvestment target.

Besides, the Government wanted to cash in on the buoyancy in the capital market encouraged by a spate of good issues.

Scandalous, says CPI(M): Meanwhile, the Communist Party of India (Marxist) has termed as ``scandalous'' the decision to sell 10 per cent stake each in ONGC and GAIL saying it showed the Government's failure to increase revenue.

``The decision to sell in the market the equity of these two blue chip companies is a scandalous one. The sole reason for this step is the Government's failure to increase its revenue and the dire necessity to reduce the fiscal deficit,'' a CPM press release said.

``The brazen manner in which the Government is selling off valuable public assets exposes the shortcomings in the Government's performance on the economic front. It is nothing but a desperate move to prettify the Budget keeping in mind the forthcoming Parliament elections", it noted.

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