(ET)
The government is planning to direct Indian Oil Corporation (IOC) to buy back shares before the end of this financial year, a move that can potentially cut its stake in the company to below 51 per cent depending on the proportion of shares offered by other shareholders, said people aware of the matter.
The finance ministry is scrambling to shore up resources, in a year tax collections as well as divestment proceeds have fallen behind targets, and is exploring various options such as increased dividends by profitable state-run oil companies, share sale and buybacks. Officials are seriously considering asking IOC to launch a repurchase programme for about 3 per cent of its shares, worth 3,200 crore on Wednesday, said the people. A buyback will allow the government to offload its shares at a premium to the current market price. The company’s shares have under performed the broader market in the past one year – IOC is down 14 per cent while the benchmark Sensex is up 10 per cent. IOC shares are down about a third since May 2019.
