Indian Oil Corporation (IOC) is withdrawing its ₹22,000-crore rights issue as the central government has decided not to participate in the share sale.
IOC said the interim budget had provided ₹30,000cr to PSU retailers, but this was withdrawn in the full budget in July. The board had approved the right issue on July 7, 2023. During the period ended June 30, 2024, the central government held 51.50 per cent in the fuel retailer.
``This is in continuation of our earlier intimation dated 07 07 2023 (July 7, 2023) wherein it was informed that the board has accorded approval for raising of capital by way of issue of equity shares on right basis up to an amount not exceeding ₹22,000 crore, subject to receipt of necessary statutory approvals,” IOC said in a regulatory filing to the stock exchanges.
“In this regard, we would like to inform that the MoP&NG (Ministry of Petroleum & Natural Gas) has conveyed that no funds have been allocated for capital support to OMCs in the Budget 2024-25, as against the earlier proposed allocation of ₹30,000 crore.’’
“Therefore, in view of the Govt. of India’s (Promoters) non-participation in the right issue, the Board at its meeting held on September 30, 2024, has decided to withdraw the proposed right issue of equity shares,’’ IOC said.
Finance minister Nirmala Sitharaman scrapped a planned ₹30,000 crore equity infusion for state-owned fuel retailers in the July budget after they reported record profits for the fiscal year ending March 31.
While the rationale for the proposed rights issue was not disclosed, market circles said IOC will have to look at other means that include a qualified institutional placement. The IOC share ended 0.64 per cent lower at ₹178.90 on the BSE.
IOC is reportedly planning to set up new subsidiary to focus on clean energy even as it is also still keen to set up a mega refinery at Ratnagiri in Maharashtra which has been facing delays. The unit was initially set to have a capacity of 60 million tonnes.
Any proposed fund raising by the PSU could, therefore, be used towards new energy and the ambitious refinery.
IOC’s announcement comes at a time Icra has said OMCs are making a profit of ₹15 per litre on petrol and ₹12 a litre on diesel amid lower crude oil prices.
With inputs from Delhi Bureau
