New Delhi, March 2: The average price from Thursday’s ONGC share auction by the government was Rs 303.67, which is 4.71 per cent higher than the reserve price of Rs 290. The auction brought Rs 766.75 crore into the government’s coffers.

Despite meeting the targeted sum, the government has decided to study the auction process before going ahead with other divestments.

“The volume weighted average price (of ONGC shares) was Rs 303.67 per share against the floor price of Rs 290,” the finance ministry said a day after the government diluted its 5 per cent stake in the upstream firm through auctions on the BSE and the NSE.

The auction, which faced “glitches”, received 3,982 bids for over 54 crore shares. However, 1,219 bids for about 12 crore shares were cancelled because of various reasons, including insufficient funds. In all, there were 2,763 valid bids for 42.04 crore shares. The government had planned to sell 44.77 crore shares.

The Life Insurance Corporation had picked up 40 crore shares, or 95 per cent of the ONGC shares, pumping in over Rs 12,000 crore, according to PTI. As on December 31, 2011, LIC had a 3.23 per cent stake in ONGC. The ONGC scrip today closed at Rs 281.45, down 2.22 per cent, on the BSE.

Finance minister Pranab Mukherjee said the government had decided to study the auction process before selling stakes in other companies.

“This (ONGC auction) is the first case. We shall have to analyse and then make an assessment,” said Mukherjee.

So far in this fiscal, the government has earned about Rs 14,000 crore from the selloffs in ONGC and PFC. The Centre had hoped to follow up the ONGC stake sale by offloading shares in Bhel, SAIL and Oil India but would now need to rethink how it would manage and price these offers.

Analysts said while auctions took less time, the method adopted by the government was not correct.

In the US, according to the analysts, auctions take place outside trading hours, and India should consider a similar practice. Moreover, inclusion of retail investors will broaden the base and result in a better price discovery.

Analysts said the lukewarm response to the ONGC offer would make it more difficult for the government to sell stakes in other PSUs.

“Had this issue got a healthy response, the government could have lined up three or four more issues. It is high time the government gets its divestment strategy more organised,” said Jagannadham Thunuguntla, a strategist at SMC Global Securities.