New Delhi: State-run Indian Oil Corp on Saturday reported a surge in September quarter profit and said it would appoint up to 6 merchant banks by 20 November to handle its planned share sale.
IOC’s September quarter profit at Rs5,294 crore ($1.18 billion) was driven by a Rs7,220 crore aid from the state for revenue losses it suffered on sale of refined products in the first 6-month of the fiscal year ending March 2011.
In the same year-ago quarter, IOC’s net profit was Rs284 crore.
The government plans to sell its 10% stake in IOC while simultaneously the company plans to sell an equal number of new shares to raise funds for local and overseas projects.
“Eighteen merchant bankers have responded to our proposal. They will make presentation and then a committee will take a decision. By 20th November a decision will be taken,” IOC chairman B. M. Bansal told a news conference.
The government has set a target to sell stakes in about 60 state-run firms in an effort to cut its fiscal deficit and boost spending on welfare programmes.
To reduce the revenue losses of state-run oil marketing firms in sales of diesel, cooking gas and kerosene, the government pays them cash subsidies while upstream state oil companies sell them crude oil and products at a discount.
IOC operates 10 refineries in the country with a combined capacity of 1.294 million barrels per day and is building a 300,000 bpd refinery at Paradip in eastern Orissa state, besides strengthening its pipeline network and upstream portfolio.
India in late-June ended government curbs on petrol prices, and raised the prices of diesel, cooking gas and kerosene. It also said eventually diesel prices would also be freed.
Analysts have said a delay in a decision on deregulation of diesel prices and lack of clarity in the compensation package for state refiners could discourage investors from IOC shares.
“We expect that there would be a clarity on the compensation package. That will have a very good impact on follow on public offer,” Bansal said.
IOC’s head of finance S. V. Narasimhan said the company was looking at raising $500 million foreign loans in the current fiscal year. The company’s foreign debt as on 31 September stood at $3.45 billion, he added.