New Delhi : The Finance Ministry wants to sell 10% of the government’s stake in Indian Oil Corp (IOC) by end of the month in a bid to achieve its Rs.40,000 cr disinvestment target. “We want to push the IOC stake sale first, within November itself. This will pave the way for disinvestment of other oil sector PSUs like Engineers India,” a senior Finance Ministry official said.
Last month, the Department of Disinvestment put off overseas roadshows for the IOC stake sale following opposition from the company and the Petroleum Ministry, which cited poor market conditions.
The roadshows were planned in London, US, Singapore, Hong Kong and Dubai. IOC shares rose 1.62% to Rs 213.20 at the close on the BSE on Friday. They have fallen 43% from the 52-week peak of Rs.375.
At the current price, the sale of 19.16 crore IOC shares, equivalent to 10% of the government’s holding in the company, would fetch more than Rs.4,000 cr, which is 10% of this financial year’s disinvestment target. The government held a 78.92% stake in the country’s largest oil refiner as of September 30. Citibank, HSBC and UBS Securities are among the five merchant bankers selected to manage the IOC share sale.
IOC Chairman R S Butola had written to the Oil Ministry in September, saying, “Current share price of IOC, already undervalued, may not fetch the fair value in the prevailing uncertain environment and investors in all probability are likely to factor in huge discount in their assessment of share price.”
A share sale under present conditions could fetch a low price and would further dent IOC’s efforts to raise loans for crude oil imports.