IOC nixes proposal to buy back its shares in divestment plan
27 May 2013
Indian Oil Corporation has reportedly turned down a proposal that it buy back its shares to support the government's 10-per cent disinvestment plan, saying that the company already has a huge debt burden and no money to spare.
The Department of Disinvestment (DoD) will now float a cabinet note in June in which it will propose selling 10 per cent of the government's stake through the offer for sale (OFS) route, PTI quoted officials as saying.
"The DoD had written to IOC for a buyback. IOC replied saying it already has a huge borrowing and cannot buy back shares as this would require it to do further borrowing," a top official said, according to the agency.
The government plans to sell 10 per cent of its stake, or over 19.16 crore shares, in the oil marketing company, seeking to garner Rs6,000-Rs7,000 crore.
At the end of April-December 2012, IOC had a cash balance of Rs938 crore and free reserves of over Rs49,000 crore. However, its borrowings stood at over Rs 94,000 crore.
The proceeds from IOC disinvestment is likely to be the second largest after Coal India in the current fiscal year.