IOCL withdraws proposed 22,000 crore rights issue
FILE PHOTO: Indian Oil Corp Ltd logo is seen displayed in this illustration taken, April 10, 2023. REUTERS/Dado Ruvic/Illustration
New Delhi| Indian Oil Corporation Limited (IOCL) has decided to withdraw its earlier proposed rights issue of equity shares worth Rs 22,000 crore. The decision was made during the company’s board meeting on Monday (September 30), according to an exchange filing. The decision is believed to have been taken due to the government not allocating funds to provide capital support to oil marketing companies (OMCs) in the 2024-25 Union Budget.
The move is a reversal from the previous announcement made by the company on July 7, 2023. At that time, the Board had approved the plan to raise capital through a rights issue after necessary statutory approvals. The proposed allocation of Rs 30,000 crore for capital support to OMCs in the Union Budget had not found space due to non-approval from the Ministry of Petroleum and Natural Gas (MoP&NG).
In view of the non-participation of the government, the Board of IOCL decided to withdraw the rights issue during the meeting. “Given the non-participation in the rights issue on the part of the Government of India (promoters), the Board has decided to withdraw the proposed issue of equity shares”, company secretary Kamal Kumar Gwalani said, confirming a regulatory filing decision.
IOCL initially planned to raise funds to support its capital expenditures and expansion projects. However, the government’s decision has affected these plans, and the company is now reevaluating its capital raising strategy.
IOCL is forming a joint venture with Sun Mobility Pvt Ltd for battery-swapping services in India, as part of other business steps. This ambitious investment plan of the company includes investing Rs 1,800 crore in this venture by FY 2026-27 along with other international investments.
With the fall in crude oil prices, oil marketing companies (OMCs) are making huge profits by selling petrol and diesel. A recent report by ICRA states that OMCs like Indian Oil, Hindustan Petrol and Bharat Petrol are making profits of Rs 15 per litre on petrol and Rs 12 per litre on diesel.
