New Delhi: The Finance Ministry wants to sell 10 percent of the government's stake in Indian Oil Corp (IOC) by end of the month in a bid to achieve its Rs 40,000 crore disinvestment target.
"We want to push the IOC stake sale first, within November itself. This will pave the way for disinvestment of other oil sector PSUs like Engineers India," a senior Finance Ministry official told PTI.
Last month, the Department of Disinvestment put off overseas roadshows for the IOC stake sale following opposition from the company and the Petroleum Ministry, which cited poor market conditions. The roadshows were planned in London, US, Singapore, Hong Kong and Dubai.
IOC shares rose 1.62 percent to Rs 213.20 at the close on the BSE on Friday. They have fallen 43 percent from the 52-week peak of Rs 375 on January 18.
At the current price, the sale of 19.16 crore IOC shares, equivalent to 10 percent of the government's holding in the company, would fetch more than Rs 4,000 crore, which is 10 percent of this financial year's disinvestment target.
The government held a 78.92 percent stake in the country's largest oil refiner as of September 30.
Citibank, HSBC and UBS Securities are among the five merchant bankers selected to manage the IOC share sale.
IOC Chairman R S Butola had written to the Oil Ministry in September, saying, "Current share price of IOC, already undervalued, may not fetch the fair value in the prevailing uncertain environment and investors in all probability are likely to factor in huge discount in their assessment of share price."
A share sale under present conditions could fetch a low price and would further dent IOC's efforts to raise loans for crude oil imports.
IOC posted an 82.5 percent drop in net profit to Rs 1,683.92 crore for the July-September quarter after losses from foreign exchange and sales of diesel, cooking gas and kerosene below cost.
The government is waiting for disinvestment in IOC before going ahead with plans to sell 10 percent in Engineers India Ltd (EIL).
At the current market price of Rs 175.10, the sale of 3.36 crore EIL shares would fetch about Rs 600 crore.
So far, the government has raised about Rs 1,325 crore from stake sales in six companies.