Cabinet may approve sale of Indian oil stake next week

The Cabinet at its next meeting may approve the sale of 10 percent of the government’s stake in Indian Oil Corporation (IOC), which may fetch over Rs 4,300 crore to the exchequer at the current market price.

The Disinvestment Department has already selected five merchant bankers – Citibank, HSBC, UBS Securities, SBI Capital and J M Financial – to manage the stake sale of the oil major.

“The proposal for 10 per cent stake sale in IOC is likely to come up in the Cabinet next week,” sources said.

[caption id=“attachment_973027” align=“alignleft” width=“380”]  Indian oil logo[/caption]

Shares of IOC closed at Rs 224.55, down 1.69 per cent, on Friday. At the current market price, the sale of the 19.16 crore shares would fetch Rs 4,302 crore to the exchequer.

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At present, the government holds a 78.92 per cent stake in IOC.

The Finance Ministry had in May moved a draft Cabinet note for the disinvestment in IOC through an offer for sale.

IOC, the nation’s largest refiner, has a market capitalisation of Rs 54,519 crore. It posted a net profit of Rs 5,005 crore in 2012-13, up from Rs 3,954 crore in the previous year.

The company’s profit peaked at Rs 10,221 crore in 2009-10.

IOC sells fuel at below-market prices, for which it is partially compensated by the government.

The disinvestment target through PSU stake sales in the current financial year is Rs 40,000 crore.

PTI