The Hindu Business Line : IndianOil’s ESOP plans may be delayed

Kolkata, Oct. 25 IndianOil may have to wait a little longer before it launches the proposed employees stock option scheme (ESOP) to retain talent. The company is facing an exodus of trained employees in several key areas of refining, pipeline, finance and IT.

While the Union Ministry of Petroleum and Natural Gas is planning to use the opportunity to formulate an ESOP policy applicable for all the oil PSUs, the issue is also considered by the Pay Committee which is slated to table its recommendations in May next.

The IOC board recently approved a 1.5-per cent ESOP scheme through fresh issue of shares. The proposal is now pending approval of the Ministry of Petroleum and Natural Gas.

“Considering that the Petroleum Ministry is trying to take a wholesome view on ESOP by oil PSUs, there may be some delay before our proposal is approved. Also, there is a possibility that the issue (of using ESOP as a measure to curb attrition) be addressed in the Pay Committee recommendations. To sum it up, we are not expecting an early go ahead on the proposal,” a senior IOC official said.

Government approval is mandatory for PSUs for any fresh issue of shares as it may lead to dilution of promoters’ holding. The Union Government currently holds 82.03 per cent in the company.

“Though we have an adequate number of IOC shares — available through the IBP merger — these shares could not be used for ESOP due to some binding clause,” the official said. “The trust was formed to use the shares (of IOC) for the benefit of IOC shareholders. Accordingly, using the same for ESOP was not possible,” the source added.

Dilution of Govt holding

On the dilution of government holding in the company, the official said that a Cabinet decision in May last , had allowed the PSU boards to decide on merger of subsidiaries below Rs 1,000 crore net worth and as long as the merged entity retains its PSU character.

“The Cabinet decision has already cleared the hurdle before merger of Bongaigaon Refinery and Petrochemicals (BRPL) which will bring down the Government holding in IOC to 79 per cent. Accordingly, we do not foresee any major hurdle before the proposed 1.5-per cent ESOP as it may lead to marginal dilution in Government holding in the company,” he said.