Cabinet cleared Disinvestment of 10 percent in Indian Oil Corporation
The CCEA on 1 August 2013 approved the proposal for sale of 10 percent Government stake in Indian Oil Corporation (IOC).
The Cabinet Committee on Economic Affairs (CCEA) on 1 August 2013 approved the proposal for the sale of 10 percent Government stake in Indian Oil Corporation (IOC). The proposal is expected to collect 3840 crore rupees to the exchequer at the current market price.
The decision was taken at CCEA meeting headed by Prime Minister Manmohan Singh.
At present the Government holds 78.92 percent stake in IOC. IOC has a market capitalisation of 54519 crore rupees. The stake sale would happen through the offer for sale route (OFS). The OFS route was introduced by SEBI in 2012 and it allows the companies to sell shares in a simplified process on the stock market platform through a one-day bidding.
The Disinvestment Department has selected five merchant bankers Citibank, HSBC, UBS Securities, SBI Capital and J M Financial to manage the sale of stake.
Indian Oil Corporation is India’s largest refiner and it posted a net profit of 5005 crore rupees in 2012-13, up from 3954 crore rupees in the previous year.
The disinvestment target through the stake sale of public sector undertakings in the current financial year (2013-14) is 40000 crore Rupees. So far, it has raised 929 crore rupees through stake sale in MMTC, Hindustan Copper and National Fertiliser.
Features of the Disinvestment Policy
• Citizens have every right to own part of the shares of Public Sector Undertakings
• Public Sector Undertakings are the wealth of the Nation and this wealth should rest in the hands of the people
• While pursuing disinvestment, Government has to retain majority shareholding, i.e. at least 51 percent and management control of the Public Sector Undertakings