ONGC likely to divest five percent by March 2011

BANGALORE - State-run Oil and Natural Gas Corporation (ONGC) is likely to divest five percent of its equity stake by March 2011 through a follow-on public offer (FPO), a top official said Thursday.

“The government has told us that it would like to divest five percent of its holding in the company by this fiscal-end (March 2011). We said we will gear up for it in the January-March quarter, as valuation of our underlying reserves is going on,” ONGC chairman and managing director R.S. Sharma told reporters here.

Post-disinvestment, the government’s holding in the country’s first ‘Maharatna’ company will be 69.14 percent from the present 74.14 percent.

Clarifying that the company would not raise fresh equity, Sharma said as its joint venture partners were raising debt from the market, there was no need for the company to go to the market.

“We don’t feel the need to raise fresh equity as we are expecting to raise through the FPO more than Rs.10,000 crore (Rs.100 billion) that we mopped up by divesting 10 percent equity holding in 2004,” Sharma said on the margins of a national quality summit, organised by the Confederation of Indian Industry (CII).

Sharma, however, declined to say if the company would go for a stock split (2:1) prior to the FPO issue.

“It is for the government to decide. Though, we have suggested for a share split ahead of divesting five percent stake,” Sharma said.

The company offered bonus issue in the ratio of 1:2, one share for every two shares, in 2006 and gave five percent discount when it went public in 2004 to retail investors and employees.

With the second largest market cap in the country, the Rs.1.03 trillion (Rs.1034 billion) ONGC is also the largest profit-making company, with net profit for last fiscal (2009-10) at Rs.19,404 crore (Rs.194 billion).