ONGC, OIL to pick 5% each in IOC next Friday

State-run Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) would pick up a five per cent stake each in IndianOil Corporation (IOC) at Rs 220 a share in an off-market deal likely on March 14. As part of the divestment strategy, the finance ministry is looking to raise at least Rs 5,300 crore on this price.

"Though there will be no lock-in period for ONGC and OIL, if they have to sell these shares in a year, the companies will have to pay a higher capital gains tax of 33 per cent. The price of Rs 220 apiece was decided on the basis of a 10 per cent discount to the prevailing price of Rs 245 apiece on the day the proposal was cleared or taking six-month average. Both were the same," said a petroleum ministry official.

Experts said this would affect the balance sheets of ONGC and OIL, under subsidy burden. IOC's stock rose 3.41 per cent on the previous day's close to Rs 264 apiece on the BSE on Thursday. ONGC's stock rose three per cent on the previous day's close to Rs 309 a share. OIL, too, closed 1.3 per cent up at Rs 476.5 a share.