ONGC FPO on schedule in March: Oil Secy

The government today said the ONGC follow-on public offer (FPO) will come on schedule in March this year.

"There is absolutely no reason to believe that FPO is not taking place this fiscal. It is proceeding according to the plan which is to take place before end of March," Oil Secretary S Sundareshan told reporters here.

Further Sundareshan added that the merchant bankers for the FPO have already being appointed and the issue is being handled by the Department of Disinvestment.

Earlier, this week, the Government had appointed Bank of America, Citigroup and HSBC among six banks that will manage the sale of government's 5 per cent stake in Oil and Natural Gas Corp (ONGC).

Six merchant bankers - Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc and Morgan Stanley, have been shortlisted for the follow-on public offer (FPO) of ONGC.

The government plans to sell 5 per cent of its shareholding in the country's biggest energy explorer in March to garner about Rs 13,500 crore.

All six banks bid Re 1 as their fees, the lowest bid allowed by the Indian government in its advertisement seeking price-quotes from BRLMs.

The red herring prospectus (RHP) for the FPO would be filed around mid-February, before which five more independent directors on the board of ONGC will be appointed to meet market regulator SEBI's listing requirement.

ONGC has six functional directors besides chairman and managing director. It also has two government appointed nominee directors taking the total strength to nine.

Besides, the company currently has four independent directors and it needs five more to meet the SEBI's listing requirements.

Post offer, the government shareholding in ONGC would come down to 69.14 per cent from current 74.14 per cent.

As a precursor to the share sale, ONGC will split equity shares with a face value of Rs 10 each into two shares of Rs 5 each. It will also issue a free share to every shareholder.

After the share split and bonus issue, the market value of ONGC's shares will dip to under Rs 300 (a share), as against today's trading price of Rs 1,162 on the Bombay Stock Exchange.
   
ONGC has already appointed two international auditors -- DeGolyer and MacNaughton and Gaffney, Cline and Associates -- to certify its and its subsidiary ONGC Videsh Ltd's oil and gas reserves, a prerequisite for any exploration firm going for a public offering.
   
The company, which usually gets its reserves audited every five years, is getting certification done just after a three-year gap this time because of the planned FPO.