The Cabinet Committee on Economic Affairs (CCEA) on Thursday gave its nod for 10 per cent disinvestment of the Government’s stake in Indian Oil Corporation Ltd.
This will be the first big ticket disinvestment in the current fiscal, where the Government targets to garner more than Rs 5,000 crore. The disinvestment target through PSU stake sales in the current financial year is Rs 40,000 crore.
However, the prevailing stock price of around Rs 195-200 would fetch up to Rs 4,000 crore. The Government currently holds 78.92 per cent in the company. The final price of offer-for-sale will be determined by the Empowered Group of Ministers.
Employees of IOC are likely to get shares at a discount of 5 per cent. Process for allocating shares to the employees will take place after the offer-for-sale through the stock exchange is completed. This will be the second offering to the employees after over 5 per cent shares allocated in 1995-96.
It is to be seen if the Government offloads the entire 10 per cent in one go or in tranches. Recently, over 9 per cent shares of Hindustan Copper were offered in tranches.
IOC has a market capitalisation of Rs 54,519 crore. The company posted a net profit of Rs 5,005 crore in 2012-13, up from Rs 3,954 crore in the previous year. Its profit peaked to Rs 10,221 crore in 2009-10. IOC sells fuel at below market prices, for which it is partially compensated by the Government.