Indian Oil sells 2.41 per cent in Gail for Rs561.5 crore

Our Corporate Bureau
02 March 2006

Indian Oil is planning to unload a part of its stake in ONGC as well. The company management has indicated that they are waiting for an opportune moment for concluding the ONGC stake sale.

The cash flows from such stake sales are critical for Indian Oil's investment and expansion plans. The company has been facing severe erosion in its operating margins over the last couple of years as crude oil prices soared and the government has been reluctant to increase retail prices.

Indian Oil slipped into the red during the quarter ended 31 December 2005. The company reported a net loss of Rs5.83 crore for the December 2005 quarter as compared to Rs1,286.76 crore during the year ago quarter. For the first three quarters of the current financial year, the company has reported a net profit of Rs889.66 crore - considerably lower than the previous year figures.

Indian Oil had acquired minority stakes in ONGC and Gail as a part of the disinvestment programme of the previous government. The stakes held in ONGC and Gail by Indian Oil is now worth over Rs20,000 crore.

Interestingly, Indian Oil had stated last month that it may not sell the shares if the government completes the issue of oil bonds to marketing companies to compensate for the lower retail prices. However, the company went ahead with the sale even after the government decision to issue oil bonds.

Indian Oil is trading at Rs562.05 (up 1.14 per cent) at 03.09 PM on the NSE today.