New Delhi, April 11: The government is expected to offer a 20 per cent stake in Indian Oil Corporation (IOC) through a public issue scheduled for the third quarter of 2004-05, which will help bridge its fiscal deficit.
IOC’s share sale in September-October will reduce the government’s holding to 62 per cent, and is expected to raise between Rs 13,000 crore and Rs 15,000 crore.
The state-run petroleum major is the country’s largest oil refiner, with a majority 48 per cent market share of domestic petro product sales, and the only Indian firm to figure in Fortune’s list of global top 500 companies.
In the 2003 financial, it has reported revenues worth Rs 1,07,550 crore, nearly 4.8 per cent of the country’s gross domestic product (GDP), and a net profit of Rs 6,600 crore.
“The proposal for a public offer would be prepared soon,” said a top company official, adding the ‘job’ would gather pace once elections are over and the new government is formed.
The share sale is expected to be priced at a near 10-15 per cent discount to the prevailing market price, analysts said.
The stake sale is part of the government’s more-than-a-decade-old privatisation programme, which has recently picked up pace after a slow start because of opposition from unions and political parties.
The government had raked in Rs 13,500 crore in 2003-04 through a flurry of public offerings of state-run firms, which includes offloading 10 per cent equity in Oil and Natural Gas Corporation (ONGC).
ONGC’s issue, which was oversubscribed six times and raised Rs 10,542 crore, caps a string of six share offers from the government in February-March.
These issues offered 75 crore shares and were oversubscribed between four times and over 40 times. The public offerings by private companies were oversubscribed as much as 35 times.
The spurt in IPOs has also been fuelled by the country’s booming economy, which expanded by 8.1 per cent in the financial year ended March 31, 2004.
Analysts said the government, encouraged by the response, may divest stakes in several companies worth Rs 2,88,000 crore through public offers in 2004-05, instead of seeking strategic business partners.
“There are some companies that the government does not want to let go such as Indian Oil Corporation and Gail. The government prefers public sales in these companies,” disinvestment minister Arun Shourie had earlier said.
The government has raised Rs 44,500 crore so far since 1991 by selling stakes in 48 firms, and nearly a third of that came in the past three weeks.
In all, there are 240-odd state firms, half of them loss-making, employing about 20 lakh workers. Most of these are overstaffed, resulting in low productivity.