Company’s investment of ` 556 cr used to buy a 4.8% stake in ONGC has grown to ` 5,880 cr
Sitting on handsome gains worth over 10 times its initial investment, India’s largest gas transportation company, state-owned GAIL (India) Ltd may look at part sale of its crossholdings of 4.8% in sister PSU — Oil and Natural Gas Corp (ONGC).
GAIL’s investment of 556 crore that was used to buy 4.8% in ONGC in 1999-2000 has grown to 5,880 crore. Offloading part of the cross-holdings is likely to help GAIL generate finances to help fund the company’s overseas forays and acquisitions.
A part sale of GAIL’s cross holdings in ONGC could be utilised by the company in funding one its largest acquisition of $3 billion that is currently underway for acquiring gas assets in a $20-billion project at Tanzania in East Africa, company sources said.
“Sale of crossholdings is one of the options that we could look at as and when we need funds,” BC Tripathi, chairman and managing director, GAIL,
Besides meeting the company’s capital expenditure requirements, the divestment of cross-holdings would also reduce a company’s borrowings and improve profitability through savings in interest costs.
“Oil and gas PSUs are free to sell their cross-holdings in sister PSUs in order to reap benefit of appreciation in share prices,” a senior ministry official said.
GAIL recently sold a fourth of its 4.6% stake in overseas city gas distribution company China Gas Holdings for 385 crore.
Indian Oil Corp (IOC) also sold 1.92% in in ONGC for 3,672 crore in 2002. IOC also sold half of its 2.4% holding in GAIL for 561 crore, a move that helped IOC net manifold gains.
“Depending on the requirement of funds, we will exercise this option to meet our future needs,” said PK Goyal, finance director, IOC.
While ONGC bought 9.1% of government’s equity in IOC and 4.83% in GAIL, IOC bought 4.83% in GAIL and 9.61% in ONGC, and GAIL bought 2.4% in ONGC.
Sitting on handsome gains worth over 10 times its initial investment, India’s largest gas transportation company, state-owned GAIL (India) Ltd may look at part sale of its crossholdings of 4.8% in sister PSU — Oil and Natural Gas Corp (ONGC).
GAIL’s investment of 556 crore that was used to buy 4.8% in ONGC in 1999-2000 has grown to 5,880 crore. Offloading part of the cross-holdings is likely to help GAIL generate finances to help fund the company’s overseas forays and acquisitions.
A part sale of GAIL’s cross holdings in ONGC could be utilised by the company in funding one its largest acquisition of $3 billion that is currently underway for acquiring gas assets in a $20-billion project at Tanzania in East Africa, company sources said.
“Sale of crossholdings is one of the options that we could look at as and when we need funds,” BC Tripathi, chairman and managing director, GAIL,
Besides meeting the company’s capital expenditure requirements, the divestment of cross-holdings would also reduce a company’s borrowings and improve profitability through savings in interest costs.
“Oil and gas PSUs are free to sell their cross-holdings in sister PSUs in order to reap benefit of appreciation in share prices,” a senior ministry official said.
GAIL recently sold a fourth of its 4.6% stake in overseas city gas distribution company China Gas Holdings for 385 crore.
Indian Oil Corp (IOC) also sold 1.92% in in ONGC for 3,672 crore in 2002. IOC also sold half of its 2.4% holding in GAIL for 561 crore, a move that helped IOC net manifold gains.
“Depending on the requirement of funds, we will exercise this option to meet our future needs,” said PK Goyal, finance director, IOC.
While ONGC bought 9.1% of government’s equity in IOC and 4.83% in GAIL, IOC bought 4.83% in GAIL and 9.61% in ONGC, and GAIL bought 2.4% in ONGC.
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