ONGC To Sell Its Stake In IOC And GAIL To Invest In HPCL
ONGC sales its stocks in IOC and GAIL to prepay the tenure loan that it is supposed to take for buying HPCL.
At last state owned Oil and Natural Gas Corp. (ONGC) gets permission from the government to sell its stocks in GAIL and IOC. The permission was given so that ONGC can accumulate money to buy HPCL; the corporation is supposed to gain Rs 36,915 crores by the stock sales.
ONGC has the largest share, 13.77% in the country’s largest refinery, Indian Oil Corp (IOC). The worth of this company at present is Rs 26,200 crores. ONGC also has 4.86% stake in GAIL India Ltd., which is a gas utility; the valuation stands at Rs 3847 crores.
As per reliable sources though the government has already provided permit to ONGC to sell the stocks, the company is yet to make the sale as they are still not getting the right price for the stocks.
At present ONGC is aiming to fund Rs 36,915 crores, which is almost 51.11% of the needed investment; the company at present already has Rs 12,000 crore cash and it is planning to take the rest as short term borrowing.
ONGC is at present a zero debt company and it wants to continue its status in the same manner by pre-payment of the debt. The company has already met Life Insurance Company of India to sell the shares but LIC has asked to buy the shares at a discounted rate of 10% from the present price of the shares of GAIL and IOC. For this reason ONGC has decided to offer the shares in the open market.
When ONGC will be acquiring HPCL this will be the first integrated oil company of the country.
The chairman and managing director of ONGC informed that the borrowing limit of the company has been increased from 25,000 to 35,000 crores.