Government has fixed the floor or minimum price for sale of its 10% stake in Oil India at Rs 510 per share, a 5.41% discount to its current market rate, to garner Rs 3,065 crore for the exchequer.
The government proposes to sell 6.01 crore shares or 10% stake in the state explorer through offer for sale (OFS) route and the auction would take place tomorrow.
The OIL public offer, the third disinvestment this fiscal, will help the government inch towards its Rs 30,000 crore revenue target from stake sales in profit making PSUs.
In a filing to the BSE, OIL said "the floor price for the sale in terms of the Sebi OFS guidelines shall be Rs 510 per equity share of Oil India Ltd (the Floor Price)".
The price is at a 5.41% discount to the current market price. Shares of OIL closed at Rs 539.20, up 2.29% over previous close on the BSE.
At Rs 510 apiece, the stake sale of 6.01 crore shares would fetch Rs 3,065 crore to the exchequer.
The decision on the floor price and date of the share sale was decided yesterday by the Empowered Group of Ministers, headed by Finance Minister P Chidambaram. However, the pricing was revealed only after close of market hours today.
The government holds 78.43% stake in the company and would come down to 68.43%, after disinvestment. OIL's paid-up capital as on March 2012, was Rs 601 crore.
As per the disinvestment roadmap of the government, OIL issue was initially slated to happen in the last week of January, to be followed by one PSU stake sale every fortnight. The government has so far raised Rs 6,900 crore through disinvestment in the current fiscal.
The stock has been on fire ever since the government started considering partial decontrol of heavily subsidised diesel prices. A partial deregulation would mean OIL having to pitch in lesser subsidy.
Upstream firms, like OIL and ONGC, make up for about 40% of the revenue that fuel retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates.
The government had on January 17 allowed retailers to raise diesel prices by small quantum every month to cut the Rs 96,000 crore deficit on the fuel sale.
The international roadshows for OIL stake sale held in the US, UK and Middle East, to attract investors saw a very encouraging response.
OIL got listed on stock exchanges in the year 2009. As on March 31, 2012, the company has employee strength of 8,096.