Oil companies line up mega public issues

“These IPOs are expected to galvanise the primary market after the disastrous year of 2001-02. The amount raised through IPOs in 2001-02 fell to Rs 1082 crore representing a decline of 56 per cent from Rs 2475 crore in 2000-01,” said a merchant banker.

The government is likely to give its approval to Indian Oil Corporation’s plan to raise funds from the stock market through an IPO next week. “The Ministry of Petroleum & Natural Gas is likely to give its stamp of approval to the proposed IPO plan, which would bring down the government holding in IOC by 10 per cent to 72.01 per cent, sometime next week,” sources said.

IOC would part-fund the Rs 9,800 crore panipat refinery project and Rs 4,200 crore petrochemical complex project at Panipat through the IPO, which was cleared at its board meeting on May 17, sources said, adding, raising the capital base from the present Rs 780 crore would also help company maintain its debt-equity ratio at the present level of 1.25:1. The size and number of shares to be issued would be finalised after the government approval.

HPCL is slated to hit the market to part-finance its new project. Commenting on the much-delayed Batinda refinery project outgoing chairman HL Zutchi said “the project is very much on. We have already received all the necessary approvals for the government and even the work on laying the pipeline has started. We have completed the formalities for the optionally fully convertable debenture (OFCD) issue which will be launched soon depending on the market conditions.”

According to merchant bankers, oil companies are taking a plunge in the stock market after revival of fortunes of public sector companies on disinvestment news. “Oil majors like ONGC, HPCL and BPCL have shot up on the stock market. The higher valuation will help these companies to raise a big amount in the public issues,” said a merchant banker.

The government has given the go-ahead to Bharat Petroleum Corporation’s IPO of about 50 million equity shares to part-finance its capital projects. The public offer, which would also include an issue of fresh equity, would bring down the government’s stake in BPCL from 66.2 per cent to 56-57 per cent and increase the company’s capital base by Rs 50-60 crore, sources said.

GAIL too has approached the oil ministry for nod to divest 5 per cent of government stake in the open market to raise funds for future projects. IPO plans of IOC, BPCL and Gail would need a cabinet nod after the Ministry of Petroleum & Natural Gas gives its stamp of approval.

The Union cabinet will also decide whether to allow IOC to sell its equity holding in exploration firm ONGC and GAIL. Since the decision (of cross-holding among the oil PSUs) was taken by the cabinet in 1999, any changes in the equity holding pattern would have to be referred to the cabinet again.

(With inputs from PTI)