State-owned Indian Oil Corporation (IOC), India's top oil company, has no plans to buyback shares as of now but will consider if there is a mandate, its Director (Finance) Sandeep Kumar Gupta said on Monday.
Chasing a record Rs 2.1 lakh crore target from disinvestment proceeds, the government has asked over half a dozen cash-rich PSUs to repurchase shares to help shore up its finances amid the coronavirus pandemic.
On a conference call with analysts and investors, Gupta said the company hasn't been asked by the government, its majority owner, to do a buyback.
"We don't have any immediate plans for a share buyback," he said.
Analysts said the government appetite for buyback in IOC is low because its holding in the company is at about 51.5 per cent. The government wants to retain at least 51 per cent stake in strategic PSUs such as IOC.
The government is reportedly planning to ask Coal India Ltd, electricity generator NTPC Ltd, miner NMDC Ltd, MOIL Ltd, KIOCL Ltd, and Engineers India Ltd to buy back shares this year. The government, being the largest shareholder in these companies, will benefit from the transactions by tendering the equity it holds in return for cash.
This will help the government access part of the more than Rs 40,000 crore of cash hoard with the companies as of March 31, at a time it has struggled to meet its target of raising money from tax and sale of state assets. So far the government has raised less than 3 per cent of the Rs 2.1 lakh crore disinvestment target.
Gupta said the IOC board will consider share buyback if asked.
He went on to add that the share buyback, if any, won't impact its capex plans for fiscal year to March 31, 2021.
Despite a slow first quarter due to coronavirus lockdown, IOC is hoping to meet its about Rs 22,000 crore capital expenditure target for 2020-21.
The government has been pushing state-owned companies to increase their capital expenditure as it looks to revive an economy seen contracting by up to 10 per cent in the current fiscal.
Capital expenditure by PSUs is a critical driver of economic growth and needs to be scaled up for this year as well as next.
Gupta said IOC is planning to expedite projects on drawing board to boost capex spend.
However, only projects based on strong viability will be taken in future as the company assess demand destruction pandemic and the transition in energy sector it has forced.
He said FY2022 capex won't be less than FY2021 target.
IOC, the nation's biggest fuel retailers, plans to add 2,400 petrol pumps in FY2021, of which 994 stations have already been commissioned.
"We want to add 2,000-2,500 retail outlets every year" to maintain the leadership position, he said.
Gupta said fuel demand is bouncing back fast on the back of festival season with petrol and diesel consumption back to pre-COVID levels already.
This has seen refineries improve operating run rate, he said adding IOC refineries were running at 95 per cent of the capacity.
Company's crude oil and petroleum product inventories are at optimal levels now, he said adding the company was holding 9 million tonnes of crude inventory and 8.4 million tonnes of petroleum product stocks.