NEW DELHI/MUMBAI, MAR 10: The government has decided to shelve the proposed disinvestment of 10 per cent of its equity in the blue chip Indian Oil Corporation - the largest company in India in terms of sales turnover - owing to adverse market conditions. Highly-placed government sources in the Ministries of Petroleum and Department of Disinvestment said that IOC, which was scheduling to begin roadshows from Saturday, will not hit the market during 1999-2000. With this the government may not be able to attain even the revised estimates of Rs 2,600 crore through divestment against the target of 1999-2000 set for the current financial year. Earlier, the overseas issue of Mahanagar Telephone Nigam Ltd (MTNL) for divestment of four per cent of government equity was deferred. IOC's scrip had hit a yearly high of Rs 325 against the present price of Rs 168, sources said, adding this tilted the decision against the divestment in the company. Shares of oil companies have been falling on Indian stock exchanges with investors, unhappy with the Union budget, selling cyclical shares. ``IOC has the potential to get a higher valuation,'' said an analyst. IOC officials said that the size of the share sale and inclusion of two other state-run firms as subsidiaries of IOC had to be resolved. "There are issues of share size and inclusion of Madras Refineries Ltd and Bongaigaon Refinery and Petrochemicals as IOC subsidiaries," he said. The government had earlier planned to sell 10 per cent of its equity, or 78 million shares, in state-run IOC with a possible five per cent greenshoe option, through the issue of shares in the domestic market and global depositary receipts (GDR) overseas. The government currently holds an 82 per cent stake in IOC. IOC and the Petroleum Ministry have sought inclusion of Madras Refineries Ltd and Bongaigaon Refinery and Petrochemicals as IOC's subsidiaries, infrastructure status to pipeline and refinery expansion projects for tax benefits, and cut in crude duty to 15 percent from 20 percent to improve refinery margins. Inclusion of Madras Refineries, which has a 6.5-million-tonne (133,562 barrels-per-day) refinery at Manali, will provide IOC a presence in southern India. IOC is expected to clock a turnover of around Rs 80,000 crore ($18.4 billion) in 1999/2000 (April-March), up from Rs 69,430 crore in 1998 While fixing the disinvestment target of Rs 10,000 crore for the fiscal 2000-01, Finance Minister Yashwant Sinha had said in his budget speech that government would be able to mop up only Rs 2,600 crore in the current fiscal. Now the only way for the government to realise the revised target of Rs 2,600 crore would be through clearing the buy-back proposal of the Power Finance Corporation (PFC) to garner about Rs 570 crore and another Rs 140 crore through the sale of its stake in joint venture Lubrizol to IOC. The government had mopped up less than Rs 1,500 crore during the first nine months of the current fiscal, according to the pre-budget Economic Survey and no PSU has approached the market since January. Earlier, Petroleum Minister Ram Naik had said "we will divest in IOC when we get good price." Naik had said on February 26 that the Government would like to see the market settle first after the announcement of budget proposals for the year 2000-01. PSUs to raise Rs 14,000 cr MUMBAI:Public sector units (PSUs) will mop up about Rs 14,000 crore through bonds, debentures and external commercial borrowings (ECBs) to part finance their investments of Rs 76,428 crore for 2000-01. Yet, over 50 per cent of the funding would come from their internal resources at Rs 39,281 crore, official sources said. While the corporations are slated to increase their plan investment by about Rs 16,000 crore in 2000-01, the target for fund-raising through bonds and ECBs has increased marginally by about Rs 670 crore from Rs 13,321 crore estimated in the current fiscal. The government has directed the PSUs to generate nearly 70 per cent of the additional investment needs through internal resources, sources said while pointing out that plan investment of PSEs slipped by about Rs 6,500 crore during the current financial year from the target of Rs 68,158 crore. Sources said PSUs' performance on internal fund generation was woefully short of the target of Rs 38,614 crore by over Rs 11,000 crore and mobilisation of external resources through bonds and ECBs slipped by over Rs 3,000 crore.
