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Wednesday, October 18, 2006

Oil India likely to float Rs 1300cr IPO

Close on the heels of the British upstream exploration company Cairn Energy announcing Rs 1300- crore initial public offering, IPO, government-owned oil exploration company Oil India plans to tap the capital market with an IPO. Bulk of its assets are based in eastern India, reports Business Standard.

According to top sources in the ministry of petroleum and natural gas, the company’s proposal to hit the capital market for expanding its equity base by about 10% is being studied by the ministry and is likely to be finalised before December. Merchant bankers have not yet been appointed for the proposed issue.

The company has proposed to hit the markets by the end of the current fiscal year that ends in March 2007. Sources, however, pointed out that the Left parties were opposed to the proposed IPO.

Currently, the government holds 98.13% stake in the company. This will come down proportionally following the public offer. Oil India has a paid up capital of Rs 214 crore (Rs 2.14 billion).

Proceeds from the IPO are expected to be used for picking up a 25% stake in Hindustan Petroleum’s nine million tonne refinery in Bhatinda as well as for a possible stake in the Numaligarh Refinery Ltd’s city gas project in Assam, valued at around Rs 500-600 crore (Rs 5-6 billion). Oil India had reported a net profit of Rs 1689.9 crore (Rs 16.89 billion) on a gross turnover of Rs 4617.65 crore (Rs 46.17 billion) last year. The company’s networth is estimated at Rs 5,848.3 crore (Rs 58.48 billion).

Oil India produced 3.23 million tonne of crude oil and 5 mmscmd of gas in FY 05-06. It has interests in 14 fields in India of which seven are onshore and four are offshore and the rest deepwater offshore.

It also has overseas operations in Nigeria and Libya. It picked up an exploration block in Libya early this month along with Indian Oil Corporation.

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