By IANS
New Delhi : A cabinet panel Thursday approved a proposal of Oil India Limited (OIL) for a fresh equity issue of 10 percent of its paid up capital through an initial public offer (IPO) to enable the company list itself on the stock exchanges.
“The fresh issue would meet SEBI (Securities and Exchange Board of India) requirements of listing the company’s share on the stock exchanges,” Finance Minister P. Chidambaram told reporters after a meeting of the cabinet committee on economic affairs (CCEA) chaired by Prime Minister Manmohan Singh.
The listing “would not only make OIL more amenable to market discipline but would also boost the company’s image. It would help OIL to raise resources for its future expansion and growth,” the minister added.
“The price at which the offer would be made will be approved by the EGoM (empowered group of ministers) constituted to decide the price for the sale of government shares,” the minister added.
The CCEA also approved the divestment of 10 percent of OIL’s paid up capital in favour of the three oil marketing companies (OMCs) – IndianOil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) in the ratio of 2:1:1 respectively.
“The divestment would not only strengthen the existing synergies of the OMCs but would also help them raise resources by disposing these shares in the open market at an opportune time to tide over their under-recoveries,” Chidambaram pointed out.
He said the proceeds of divestment would accrue to the government and will be used for meeting the needs of social sector programmes as also for the capital investments needs of revivable public sector undertakings.
The CCEA also approved OIL’s proposal for issuing an additional one percent of its paid up capital to its employees.
“This will motivate the employees to perform better,” the minister contended.