The global depository receipts (GDR) and domestic retail issue is now expected to be 10 per cent of the expanded share capital of Rs 778 crore.

The 1:1 bonus issue, for which the company secured shareholders nod last week, will double Indian Oil's paid-up equity of Rs 389 crore. Since the GDR and retail issues follow the issue of bonus shares, the Cabinet approval for 10 per cent divestment will translate into offloading of Rs 77.8 crore worth of equity.

Before the bonus issue was announced, the global coordinators for the Indian Oil disinvestment exercise were considering offering Rs 38.9 crore worth of equity in the local and overseas markets. At its last meeting, the Cabinet had reportedly settled for an offer of 5 per cent of the company's equity in the current fiscal.

The 10 per centdivestment was approved by the Cabinet earlier. The new thinking on the GDR and domestic issue stem from the improved mood in the markets.

Indian Oil chairman MA Pathan confirmed the Centre's plan to schedule the long-pending divestment in Indian Oil to the last quarter of this financial year at the company's annual press meet on Monday. The task force on IOC disinvestment is yet to decide the quantum of shares to be offered as GDR and the size of the domestic retail issue.

Indian Oil director, finance, P Sugavanam said it was still not clear whether the 10 per cent divestment meant 10 per cent of the post-bonus issue share capital of the company. The Government continues to remain Indian Oil's principal shareholder with an 82 per cent stake. Fellow national oil company, the Oil and Natural Gas Corporation (ONGC) recently acquired a 10 per cent shareholding in Indian Oil, through an equity swap.

The share float will follow the highest ever pay-out by Indian Oil to its shareholders. The company will paya 130 per cent dividend for last year, entailing a pay-out of Rs 506 crore. The year before it had paid a 50 per cent dividend, entailing a payout of Rs 195 crore.

The bonanza follows a 30 per cent jump in net profit to Rs 2,214 crore from 1,706 crore in 1997-98. Indian Oil's net profit had grown by 20 per cent that year.

The company's sales turnover went up 17 per cent to Rs 69,430 crore from Rs 59,176 crore the previous year. The huge profit of the country's largest oil refining and marketing company (with a market share of 54.5 per cent) was despite Rs 4,332 crore of investments in capital assets. Pathan had announced that 83 per cent of the corporation's Rs 21,646 crore fixed assets were financed by internal accruals. The redemption of Rs 5,047 crore of oil bonds issued to Indian Oil also helped improve the company's liquidity position, he said.

With reserves of Rs 11,880 crore, Indian Oil is now venturing out alone on its proposed East India Refinery at Paradip. Negotiations with Kuwait PetroleumCompany having run aground, Indianoil is scouting for a new partner.

Meanwhile, said Pathan, Indian Oil will go it alone on the refinery project. In the coming three years, the company will spend Rs 25,000 crore on new projects, including expansions of its refineries at Gujarat and Panipat.

At the end of the 10th plan period, said Pathan, Indian Oil will have spent Rs 60,000 crore on asset formation. Its refining capacity will then catapult to 88 million tonnes from 36 million tonnes this year, thanks to two new refineries at Paradip in Orissa and Nagapattinam in Tamil Nadu and the expansion of its seven refineries.

In the first public statement on the company's bid for a stake in the Indian Petrochemicals Corporation Ltd (IPCL), Pathan said Indian Oil would contest for the public offer of government stake. Even though no formal communication has been made to the company, its bid has reportedly been rejected because it was submitted too late.

Indian Oil has now petitioned the ministry of petroleum forits right to stake a claim to the 25 per cent of government stock in IPCL now on offer. The national oil company is fast diversifying into petrochemicals and is setting up a refinery residue-based petrochemical plant at Panipat.

Company sources also confirmed that Essar Oil had offered a controlling stake in its 10.5-million-tonne refinery in Gujarat to Indian Oil Corporation. Essar Oil, incidentally, is also negotiating a marketing arrangement with Indian Oil for its refinery products.

Pathan said the signing of the pact had been delayed because of the changed schedule for commissioning the project.

INSIGHT
Company yet to receive marketing dues

Indian Oil has rewarded its shareholders (mainly the government) well during the year. Along with a dividend of 130 per cent, the company has also announced a 1:1 bonus. The government has also earned by way of swaping of IOC's equity to ONGC. In a smart move, the Centre after delaying the divestment waited for market sentiment toimprove.

Now after the company has announced a bonus issue, the government is selling twice the number of shares. At the current price of around Rs 430, the divestment of 7.78 crore shares will mean Rs 3,345 crore to the government. Despite all these, the Centre, through its arm OCC, has failed to pay the company its marketing dues.

Shishir Asthana