The Hindu Business Line : OIL to invest Rs 13,000 cr in 5 years, mulls IPO in Nov

Ahmedabad, Sept. 2 Public sector “mini ratna” Oil India Ltd — which proposes to hit the capital market around November 10, offering 2.64 crore shares — intends to invest nearly Rs 13,000 crore over the next five years on its various expansion plans, the company’s top officials said here on Tuesday.

OIL has lined up an aggressive expansion plan envisaging a total fund requirement of Rs 4,574.78 crore as capital expenditure for 2009 and 2010 towards exploration and appraisal activities, development activities in producing fields, purchase of capital equipment and contract for facilities and diversification of existing business in downstream activities, according to Mr M.R. Pasrija, Chairman and Managing Director; Mr T.K. Ananth Kumar (Director-Finance) and Mr N.M. Borah (Director-Finance).

Confirming that OIL would be bidding for assets in Australia, Mr Pasrija told Business Line that India’s second largest exploration and prospecting company continued to look for profitable assets abroad. “Australia is, of course, one of these areas.”

OIL and Indian Oil were reported to be looking for partners to participate in the next bidding round for hydrocarbon exploratory assets in Australia, expected to open in the next couple of months. It is likely to be a participatory stake and the combine could rope in an operating partner.

OIL is present globally through exploration of crude oil and natural gas in Gabon and Libya, where it is an operator, and Iran and Nigeria, as a non-operator. It was recently awarded exploration blocks in Yemen as part of a consortium, the officials told reporters. When OIL submitted its DRHP to SEBI in December last year, it intended to raise $378 million from its proposed IPO to fund the immediate needs of exploration, development and purchase of equipment.

However, on the basis of the revised DRHP containing information updated till June 30, “Our bankers are working on the exact amount to be raised now, in view of the company’s financials and other parameters to be taken into account.”

Along with the IPO of expanded equity base, the Government would divest 10 per cent of its holdings in OIL to Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd. Accordingly, the Government of India — which holds 98.13 per cent share in OIL, the remaining 1.87 per cent equity being with the employees — would, post-IPO, have 78.5 per cent holding.

Of the remaining 21.5 per cent, 11.5 per cent will be held by employees and others, five per cent by IOL, and 2.5 per cent each by HPCL and BPCL. The IPO was delayed partly because the company could not appoint independent directors on its board. But the issue has since been resolved as its 12-member board now has six independent directors, one Government director and five functional directors.

OIL, whose revenues amounted to Rs 6,900 crore (excluding subsidy), earned a net profit of Rs 1,789 crore in 2007-08. In the first quarter of 2008-09, its profits were Rs 846 crore. The company now produces six million tonnes per annum of oil and gas from its various fields across 10 States in India, particularly Assam, Arunachal Pradesh and Rajasthan. It produces India’s 10 per cent of oil and seven per cent of gas and boasts of a 56-year-old, 1,157-km-long pipeline of its own in the North-East.

In the countries where it has a presence, OIL is active in an acreage of 30,687 sq km whereas it has interests in 1.54 lakh sq km within India. The company has grown 10 times since the NELP began in 1999, the officials added.

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