The Hindu Business Line : IOC nets Rs 3,225 cr by diluting stake in ONGC

The deal
IOC offered ONGC shares in the price band of Rs 1,330-1,399 per share.
Earlier, IOC sold 50 per cent of its 4.8 per cent stake in GAIL for Rs 561 crore
Morgan Stanley and Citigroup Inc managed the sale

New Delhi , April 27

Indian Oil Corporation has made a net gain of over Rs 3,225 crore on sale of 20 per cent of its 9.6 per cent share in ONGC through bulk deal.

According to an Indian Oil official, the company on Thursday sold 2.74 crore shares or 1.92 per cent of the total equity capital in ONGC at Rs 1,340 per share, amounting to Rs 3,669.73 crore, thus making substantial gains as it has picked up these shares in 1999 at Rs 162.34 per share. This amount would be used for improving the overall liquidity position and working-capital requirement of the company, sources said. The company has a committed capital expenditure of Rs 6,500-Rs 7,000 crore during the current fiscal.

Morgan Stanley and Citigroup Inc managed the sale, sources said. The company offered ONGC shares in the price band of Rs 1,330-1,399 per share. Indications are that about 50 Indian and foreign institutional investors, including LIC and HSBC Franklin Templeton, participated in the sale, which was done through the book-building route.

The company had on March 2 sold 50 per cent of its 4.8 per cent stake in GAIL for Rs 561 crore to repay part of its debt and to fund expansion plans.

Debt repayment

The latest proceeds would also be used to pre-pay part of the Rs 26,000 crore debt of the company, a company official said adding that the sale was necessitated as IOC wanted to realise the investment. Besides, the company has not been able to generate enough surplus because of revenue loss arising due to non-revision of fuel prices despite spiralling crude oil prices. IOC is losing Rs 80-Rs 100 crore per day because of selling the four petroleum products — petrol, diesel, LPG and kerosene — below the production cost.

The non-revision of retail prices of petroleum products by the Government is expected to lead to under-recoveries of an estimated Rs 57,000 crore by oil marketing companies — IOC, Bharat Petroleum Corp and Hindustan Petroleum Corp in 2006-07. The three together lost Rs 4,722 crore in revenues in April.

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