Public sector oil marketing companies (OMCs)Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum have informed the Department of Public Enterprises that they have no immediate plans to issue bonus shares.
This is in response to the recent recommendations made by the government?s inter-ministerial committee. In a review of performance, the committee had asked all ?navratana? PSUs, whose reserves are in excess of three times their paid-up capital, to consider issuing bonus shares. The list included oil and gas companies like IOC, BPCL,HPCL, GAIL and ONGC.
Confirming the move, a petroleum ministry official said, it had been clarified to both the inter-ministerial committee and the apex committee that the OMCs had no plans to issue bonus shares because of their continuing under-realisation on domestic sales of petroleum products. But, other oil and gas PSUs like ONGC and GAIL could consider a bonus issue in the near future.
The official explained that the petroleum ministry had already brought to the notice of the inter-ministerial committee that there was an escape clause. The public enterprises department guidelines say that PSUs should ensure that, after issuing bonus shares, enough reserves are left which, together with a future plough-back of profit, are sufficiently large to inspire the confidence of existing and potential shareholders so that scrips of the companies remain attractive in the market.
?In the current scenario, where the OMCs have no certainty regarding their revenue streams, the issuance of bonus shares might lead to a reduction in dividend yield to shareholders. We have told both the committee and the apex committee that, in the current economic scenario, and in view of the continuing under-realisation, the OMCs have no plans now to issue bonus shares,? the petroleum ministry conveyed to department after consultations with these companies.
IOC?s reserves and surplus are 29 times (Rs 33,365 crore) its paid-up capital (Rs 1,168 crore). For HPCL, it is 28 times (reserves Rs 9,260 crore, paid-up capital Rs 339 crore). For BPCL, it is 27 times (reserves Rs 9,912 crore, paid-up capital Rs 362 crore). ONGC?s reserves of Rs 59,785 crore are 28 times its paid-up capital of Rs 2,139 crore. On a paid-up capital of Rs 845.65 crore, the free reserves of GAIL are at Rs 10,547.26 crore. This is about 12.5 times the paid-up capital.
