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Sunday, March 16, 2014

ONGC & Oil India Buys Stake in Indian Oil Corporation


Indian Oil Corporation sell stake to ONGC and Oil India. Both ONGC and Oil India has bought 5% stake in Indian Oil corporation. This stake sell yielded Rs. 5340 Crore to Government disinvestment program.
Investors generally fells that Oil India hasn’t sell their stake in Open Market then how government gets that amount under disinvestment target???
Answer for the that question is that Oil India and ONGC jointly paid Rs. 5340 Crore which will leads to reduced oil Subsidy burden on Indian Oil corporation.
This deal happens at Rs. 220 /Share. With this transaction ONGC stake rises to 13.77% and Oil India now has 5% stake.
Investors may also think when they haven’t gone for Offer for sale???
Initially Government has decided to go for offer for sale but they reluctant to go for as they think that current Stock price of IOC don’t justify the valuations. Also previous OFS don’t have good response as ONGC OFS get failed and LIC bought at last moment for success of ONGC OFS.
This is right way of Disinvestment as Cash rich PSU’S will buy stakes in other PSU as earlier Government has eroded Investors value through OFS at Lower prices.


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ONGC & Oil India Buys Stake in Indian Oil Corporation


Indian Oil Corporation sell stake to ONGC and Oil India. Both ONGC and Oil India has bought 5% stake in Indian Oil corporation. This stake sell yielded Rs. 5340 Crore to Government disinvestment program.
Investors generally fells that Oil India hasn’t sell their stake in Open Market then how government gets that amount under disinvestment target???
Answer for the that question is that Oil India and ONGC jointly paid Rs. 5340 Crore which will leads to reduced oil Subsidy burden on Indian Oil corporation.
This deal happens at Rs. 220 /Share. With this transaction ONGC stake rises to 13.77% and Oil India now has 5% stake.
Investors may also think when they haven’t gone for Offer for sale???
Initially Government has decided to go for offer for sale but they reluctant to go for as they think that current Stock price of IOC don’t justify the valuations. Also previous OFS don’t have good response as ONGC OFS get failed and LIC bought at last moment for success of ONGC OFS.
This is right way of Disinvestment as Cash rich PSU’S will buy stakes in other PSU as earlier Government has eroded Investors value through OFS at Lower prices.