The board of Videocon Industries on Friday decided to demerge its oil and gas business.
It has, in-principle, agreed to the appointment of various agencies for working out detailed alternative schemes for unlocking the shareholders’ value.
“Out of the alternative schemes given by the agencies and recommended by the re-organisation committee, the board will identify one scheme that best suits interest for unlocking shareholder value, and subject to necessary approvals, proceed further,” the company said in a statement to the Bombay Stock Exchange (BSE).
However, the business reorganisation is subject to necessary approval of the banks and financial institutions.
Videocon Industries and state-run Bharat Petroleum Corporation (BPCL) hold 10 per cent stake each, in gas rich block in Mozambique. British oil company Shell Plc and Thailand’s biggest oil explorer PTT Exploration and Production have bid for 8.5 per cent stake held by Videocon and BPCL's partner Cove Energy in the same block.
This has, since the beginning of this year, led to an increase in BPCL and Videocon's combined asset size to more than Rs 24,000 crore.
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The gas block, located in the Rovuma basin Area 1concession in Mozambique, is expected to have reserves of over 50 trillion cubic feet (tcf).
Cove Energy announced its intentions of sale this January. Other than Cove Energy, BPCL and Videocon Industries, the Rovuma basin has Anadarko Petroleum with 36.5 per cent participating interest, 20 per cent by Mitsui E&P and the national oil company with 15 per cent stake in the basin. Anadarko is the operator of the block. The production from the fields is expected to start from 2018.
Videocon's scrip closed flat at Rs 174.75 on the BSE.