Oil India set for public issue soon
Friday, 16 February 2007, 06:00 Hrs
New Delhi: The Indian government is set to unveil an initial public issue by the state-run Oil India Ltd (OIL) to raise an estimated $265 million (12 billion). "We propose to offer fresh equity of four million shares or 10 percent for the proposed public issue. It will not amount to any kind of disinvestment by the government," a senior official in the petroleum ministry argued. Apart from the majority government stake, another 1.87 percent equity in the company is held by 6,615 shareholders, mainly employees, officials said. According to a confidential valuation of the company, the government expects a floor price of at least 600 per share in the public offer, which will fetch the company a minimum of 12 billion. The valuation note also explains that the sale will not amount to any kind of divestment by the government in the company, which is classified as a mini-ratna or a mini-jewel, among state-run enterprises. "Divestment refers to the sale of any part of government equity holding in a public sector undertaking but there is no proposal to disinvest any part of government holding in OIL," the note said in an obvious reference to the opposition against divestment by the Left parties. According to officials, the listing will make the management more responsive to shareholders, help improve corporate governance and enhance the company's image in the domestic and international markets. The company has been allowed a fast track mechanism for acquisition of overseas assets, and as a listed company with more resources, it would be better placed to pursue its overseas exploration and production aspirations, officials said. The company mainly has a presence mainly in the northeast, but it also nurtures ambitions of acquiring a national or even an international character. "Listing by way of a public offer will go a long way in its growth and expansion plans." The unlisted company made a profit after tax of 16.90 billion in 2005-06. Its authorised capital amounts to 2.5 billion, while its paid up capital stands at 2.14 billion.