ONGC approves stock split, bonus issue

ONGC approves stock split, bonus issue

New Delhi: The board of state-owned Oil and Natural Gas Corporation (ONGC) on Thursday approved a special dividend of Rs32 per share, a stock split and a bonus issue, the company said.

ONGC will split equity shares of Rs10 face value into two shares of Rs5 face value.

Furthermore, the board approved a 1:1 bonus share issue -- one new share being issued for every existing equity held by shareholders -- as a precursor to the company’s planned follow-on public offer (FPO) in March, 2011.

After the share split and bonus issue, the market value of ONGC’s shares will dip to around Rs335, as against today’s trading price of Rs1,328 on the Bombay Stock Exchange and it is expected this will be an attractive level for retail investors to subscribe to the company.

On 1 December, the Cabinet had approved sale of government’s 5% stake in ONGC through a follow-on or further public offer (FPO) to raise an estimated Rs13,000 crore.

Following the offer, the government’s stake in ONGC would come down to 69.14% from 74.14% at present.

ONGC has already appointed two international auditors -- DeGolyer and MacNaughton and Gaffney, Cline and Associates -- to certify its oil and gas reserves, a prerequisite for any exploration firm going for a public offering.

The reserve certification are expected by month end, Sharma said.

The company, which usually gets its reserves audited every five years, is getting certification done after just a three-year gap this time because of the planned FPO.