Financial Daily from THE HINDU group of publications
Monday, Dec 12, 2005
Markets - Stocks
Corporate - Buyback
Cross-holding in IOC, GAIL ONGC drops buyback plan, may divest stake in market
Pratim Ranjan Bose
Kolkata , Dec. 11
THE issue of unlocking of cross-holdings among three major oil PSUs ONGC, GAIL and Indian Oil is fast reaching a new turn.
According to highly-placed sources, ONGC has not only dropped its plan for buyback of shares from IOC and GAIL, but is now actively considering off-loading part of its holdings in the two companies in the capital market, as early as in the fourth quarter of this fiscal.
According to current market prices, ONGC holds shares worth Rs 5,900 crore and Rs 1,140 crore in IOC and GAIL respectively.
As things stand, both ONGC and IOC may sell 20-25 per cent of their holdings in each other as early as the fourth quarter of this fiscal.
IOC's holdings: It may be mentioned that IOC has 9.6 per cent stake in ONGC. ONGC holds 10 per cent in IOC.
IOC and ONGC each hold 5 per cent in GAIL and the latter holds 2.35 per cent in ONGC.
Though GAIL had previously expressed interest in selling stake in ONGC, it is not known whether the company will take an immediate call on the same.
"We are considering off-loading our stakes in IOC and GAIL," a senior ONGC official told Business Line.
"The situation is very dynamic and you never know we may be the first one (among the three oil PSUs) to off-load the stakes in the market," he said.
The Union Ministry of Petroleum and Natural Gas has already asked the three oil companies to off-load cross-holdings in tranches to avoid large-scale impact on the stock prices of the respective companies.
IOC's plan: IOC, in the meantime, has progressed with its plan on diluting its stake in ONGC worth close to Rs 15,000 crore at current prices. The company aims to off-load 2-2.5 per cent stake in ONGC worth Rs 3,000-3,700 crore.
According to sources, to avoid probable time and cost over-run in selling the stake in the market, the company has preferred selling the same to the domestic and foreign institutional investors through "block-deals."
The company is also reviewing prospects of off-loading part of its stake in GAIL. "We are yet to take a call on GAIL shares and will place a firm proposal on this issue to its board either this month or next month," a senior company official told Business Line.
ONGC and IOC closed at Rs 1,127.70 and Rs 505.90 respectively on the NSE on December 9. GAIL closed at Rs 270.
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