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The Cabinet has cleared the proposal for sale of 10% government stake in Indian Oil Corporation (IOC), which may fetch around Rs 3,695 crore to the exchequer at the current market price.
"The CCEA has approved the disinvestment of 10% paid-up equity in the IOC. The disinvestment will be through Offer for Sale (OFS) method in the domestic market," an official statement said.
The IOC scrip closed at Rs 192.90, down 1.46% on the BSE. At the current market price, the sale of the 19.16 crore shares would fetch Rs 3,695 crore to the exchequer.
Government holds a 78.92% stake in IOC and following divestment the stake would come down to 68.92%.
The Disinvestment Department has already selected five merchant bankers -- Citibank, HSBC, UBS Securities, SBI Capital and J M Financial -- to manage the stake sale of the oil major.
IOC, the nation's largest refiner, has a paid up equity capital of Rs 2,428 crore as on March 31, 2013. It posted a net profit of Rs 5,005 crore in 2012-13, up from Rs 3,954 crore in the previous year.
The company's profit peaked at Rs 10,221 crore in 2009-10. IOC sells fuel at below-market prices, for which it is partially compensated by the government.
It is primarily engaged in refining, transportation and marketing of petroleum products and petrochemicals with an installed refining capacity of 54.2 million metric tonnes.
The company is also now venturing into exploration and production of crude oil and distribution of natural gas.
The government's disinvestment target through PSU stake sales in the current financial year is Rs 40,000 crore.
