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The Cabinet Committee on Economic Affairs may consider share allocation to the employees of Indian Oil Corporation when taking up the issue of diluting the Government’s stake in the company.
“Employees are likely to get shares at a discount of 5 per cent,” a senior Government official told Business Line . The process for allocating shares to the employees will take place once the offer-for-sale through the stock exchange is completed.
IOC will be the first big ticket disinvestment in the current fiscal. The issue is expected to be taken up by the CCEA this week. The Government proposes to dilute 10 per cent stake in the oil marketing company.
The Government currently holds 78.92 per cent in the company. The share closed at Rs 226 with a gain of nearly half a per cent over Monday’s closing price.
If the share dilution is done at an average price of around Rs 250, the Government expects to get over Rs 6,000 crore. But the current price market price of the company is around Rs 225, which will give the Government a little over Rs 4,000 crore.
However, the final price of the offer-for-sale will be determined by the Empowered Group of Ministers once the CCEA clears the sale proposal.
The Cabinet panel will also take a call on whether the entire 10 per cent is to be offloaded in one go or in tranches. “Any decision will be taken on the basis of market conditions,” the official said. Recently, over 9 per cent shares of Hindustan Copper were offered for sale in tranches.
On the employees’ quota, the official said that the maximum number of shares offered will not be more than 0.5 per cent of the total paid-up equity capital, or 1.21 crore shares. A discount will be offered at the issue price or the discovered price under the OFS mechanism.
This will be the second offering to IOC’s employees following the first such allocation of five per cent in 1995-96.
IOC has a market capitalisation of Rs 54,519 crore. It posted a net profit of Rs 5,005 crore in 2012-13, up from Rs 3,954 crore in the previous year. The company’s profit peaked at Rs 10,221 crore in 2009-10. IOC sells fuel at below market prices, for which it is partially compensated by the Government.
The disinvestment target through PSU stake sales for the current financial year is Rs 40,000 crore.
> shishir.sinha@thehindu.co.in
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