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ONGC to wait for right price before offloading shares in IOC, GAIL

Initially, ONGC considered selling its stake in IOC and GAIL to fund the acquisition, but it has never found the right price to offload the shares

Press Trust of India  |  New Delhi 


State-owned and (ONGC) is not in a hurry to sell its in Corp and (India) and will wait for the right price before offloading the shares, a senior company said.

holds 13.77 per cent in refiner and 4.86 per cent in

"It is true that we are now a fully integrated company. We are India's largest and the acquisition of (oil refiner) HPCL has extended our presence in the downstream industries.

"And so naturally, it now does not make sense for to hold in (IOC). But, we will wait for the right price," said the

ONGC, he said, got over Rs 30 billion in dividend income from investments in and in 2017-18 financial year.

"This is a decent return on capital and can help me hold on to for long," he said. "I am in no hurry to sell the stake. We will wait for the right price."

ONGC's 13.77 per cent stake in at Monday's closing price of Rs 153.80 apiece on BSE is worth over Rs 205 billion. Its 4.86 per cent stake in GAIL is worth close to Rs 42 billion at Monday's closing price of Rs 380.75.

"IOC were trading at around Rs 195 in January and are now at Rs 153-154. It doesn't make sense to sell the at such a big loss, the said.

ONGC, he said, is generating enough surplus mainly because of international spiking to four-year high and the rupee plummeting to an all-time low.

It is using these to pay off Rs 248.81 billion loan it had taken to buy (HPCL) for Rs 369.15 billion.

A third of the loan has already been pre-paid, he said.

had borrowed Rs 248.81 billion on a short-term loan to fund buying of the government's 51.11 per cent stake in HPCL. The remaining came from its cash reserves.

The official said the pace of repayment may slow down in the third and fourth quarters owing to outgo on taxes and dividend as also the fact that capital spending would peak by then.

Initially, ONGC considered selling its stake in IOC and GAIL to fund the acquisition, but it has never found the right price to offload the shares, he said.

The short-term loan ONGC availed had a provision to prepay without any penalty.

ONGC had held talks with of (LIC) for selling IOC and GAIL shares but the insisted on buying them at 10 per cent discount to the prevailing price. ONGC thus decided against the share sale.

ONGC's purchase of HPCL created India's first integrated oil company. This was ONGC's biggest acquisition and second buyout of 2017-18 after its Rs 77.38 billion acquisition of 80 per cent stake in Gujarat State Petroleum Corp's KG

HPCL added 23.8 million tonne of to ONGC's portfolio, making it the third largest refiner in the country after IOC and

ONGC already is majority owner of and Petrochemicals, which has a 15-million tonne refinery.

First Published: Tue, October 02 2018. 14:20 IST