IndianOil Corporation on Friday said it is opposed to the government's move to sell 10% stake when its share price is "unduly depressed", even as the company reported an 82% drop in net profit for the second quarter.
Net profit dropped to Rs 1,684 crore during the July-September quarter from Rs 9,611 crore in the year-ago period. "The decrease in profit is mainly on account of exchange loss of Rs 2,158 crore against the exchange gain of Rs 2,289 crore in the corresponding previous quarter," IOC chairman R S Butola said.
Also, the company had to absorb Rs 413 crore of loss on diesel and cooking fuels. IOC share closed at Rs 213.20 on the BSE, or 45% below the 52-week peak of Rs 375 reached on January 18.
The company lost Rs 18,291 crore on selling diesel, cooking gas and kerosene during the second quarter. It received Rs 8,634 crore discount from state-run oil producers and another Rs 9,243 crore cash from the government as subsidy. Even after these, the company had an unmet revenue loss of Rs 413 crore.
On disinvestment, Butola said, "We had given our inputs (on the disinvestment) in October... We believe prices are unduly depressed at this point of time... They (government) would like to assess the market conditions and response for themselves. Government decision (on disinvestment) is still awaited."
The sale of 19.16 crore IOC shares at the current price would fetch the government about Rs 4,000 crore. Government held 78.92% in the country's largest oil refiner as on June 30.
The roadshows for the stake sale were to be held from October 6 but were put off following opposition from IOC and its parent oil ministry which held that the country's crown jewels cannot be sold at low prices.
Butola said there may be an upside in the share price if the government were to accept the Kirit Parikh committee recommendation on fuel pricing which seeks to address current uncertainties such as lack of a transparent subsidy-sharing mechanism and fluctuation in profitability.
A share sale under present conditions could fetch a low price and would further dent IOC's efforts to raise loans for crude oil imports.
Source:- timesofindia.indiatimes.com
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