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|OIL INDIA LIMITED|
|Disinvestment of GoI & Listing OIL’s Share||By T. K. Ananth Kumar, Director (Finance), Oil India Limited|
Oil India Limited is a premier Indian National Oil Company, engaged in the business of exploration, development and production of crude oil and natural gas, transportation of crude oil and production of LPG from its produced gas. OIL is engaged in conducting exploration activity both in India and overseas through JV agreements and PSCs with other oil companies and has 52 years of experience in this business.
Government of India as a majority share holder decided to list OIL share in both the stock exchanges of India (BSE and NSE) through Initial Public Offering (IPO) not only to raise fund for meeting its various exploratory & development activities but to unlock the potential of OIL share in the landscape of corporate entities.
Therefore the project here is listing of OIL’s share on Bombay Stock Exchange and National Stock Exchange through initial public offering as per the timeline set by the Government of India.
It was a mammoth task for a company like OIL who maintained a low profile status in the hydrocarbon sector in India while comparing with its peer company. Oil India Limited whose majority of the revenue comes from the North East part of the country where it manages its oil & gas fields has always been branded as a North East based company in spite of its NOC status. However the Management of OIL accepted the challenge and played a crucial role in executing each assignment of the project to realize its objective.
It required meticulous planning and well coordinated multipronged approach to transform OIL’s image from a low profile company to a highly visible corporate in front of general public, strategic investors, analysts, media, etc. for successfully list OIL share in the stock exchanges of India.
PROJECT EXECUTION PLAN
OIL approached Government of India to grant approval for listing its share in both the exchanges (BSE & NSE) of India. Government of India as the majority share holder of OIL accorded its approval through MOPNG to OIL for issue of fresh equity capital for raising fund through Initial Public Offer (IPO) to meet exploratory and developmental activities of OIL. GoI also decided to disinvest 10% of its pre issue equity stake in OIL for meeting its financial requirements. The proposed IPO and disinvestment plan of OIL’s equity capital given below.
While it was planned to issue fresh equity capital as above through IPO, disinvestment of 10% pre issue capital to three oil marketing companies by GoI proposed to be distributed as under.
Management of OIL formed an IPO Committee consisting of Functional Directors of OIL including Chairman and Managing Director (CMD) and a Project Management Team consisting of the Executives from different departments of OIL under Director (Finance) as Project Coordinator. They were initially briefed about the whole IPO process including the various milestones.
With no expertise in IPO process, OIL Management galvanized its limited resources and deliberated in details the strengths and weaknesses to draft the work plan for the Project execution.
The Broad Activity list to progress as per the objective of the project has been prepared internally by the project coordinator. In order to progress as per the work plan, various outside agencies were engaged such as Lead Managers, Statutory Auditors, Underwriters, International Legal Counselor, Domestic Legal Counselor, Monitoring Agency, Registrar, Legal Counsels, Grading Agency, Registrar to the Issue, Depositories, Printers etc., for successful implementation of OIL’s IPO activities.
Apart from engagement of various experts as stated above it was necessary to prepare the detailed offer document. The Project Management Team formed internally for the purpose of preparing the offer document (DRHP/RHP) had to give their quality effort and time. Considering the type of assignment and the work involvement the team required to educate themselves adequately and execute spirited effort to complete the assigned task as per the timeline. The team spirit which was built in a gradual manner kept the tempo of the team very high throughout the IPO process till the listing of the OIL share in both the stock exchanges of India.
All the activities both internal and external were closely monitored with necessary mid course correction by the Project Coordinator to bring in better corporate visibility for the successful listing of Company’s share.
The Road Shows were held in-country as well as overseas to show case the strength and capability of the Company. The Road Shows organized for OIL IPO was well attended by a sizeable number of receptive crowds consists of potential investors, analysts, brokers, etc. in various locations. The queries and doubts raised by the potential investors, analyst, and brokers during the road shows were cleared by the attending OIL Team. The marketing initiative undertaken by the project team of OIL to create awareness among the general public, potential investors, analysts and brokers resulted in creating a conducive environment for OIL IPO in spite of prevailing adverse condition considering very poor listing of PSU share just before the OIL IPO.
IMPLEMENTATION OF THE PLAN
The chronology of events while executing various assignments for OIL’s IPO indicated as under.
BREAK UP OF THE IPO AND DISINVESTMENT IS GIVEN BELOW
Disinvestment of OIL’s 10% pre-issue paid up equity capital (21.4 million shares) by GOI (in the ratio 2:1:1)
The target milestones were achieved on the stipulated time lines. The IPO was a smashing success despite being in the high price range of Rs. 950 - Rs. 1050/- per share which was the second highest price in the market after the Jet Airways IPO and highest for any PSU IPO.
The whole IPO process was completed in record time by diligently executing Project Management skills and OIL Shares were successfully listed on National Stock Exchange and Bombay Stock Exchange on 30th September, 2009. It was a well executed project with excellent coordination among all the agencies engaged for the IPO including the support of MOPNG and Department of Disinvestment.
The overwhelming response and interest shown by the investors for OIL’s share made it a landmark IPO. The confidence reposed by strategic investors, general public, and analysts for OIL’s share has changed the prevailing Indian equity market and opened up opportunity for other PSU for such endeavor. The accolades received for the success of the IPO from various quarters considered to be a remarkable achievement for OIL. The success and the whole project management effort was duly appreciated and acknowledged by Shri. R. S. Pandey, Secretary, MOPNG and Shri. Sidhartha Pradhan, Joint Secretary, Department of Disinvestment, MOF.
The Company duly recognized the meritorious services rendered by BRLMs and various intermediaries viz. ILC, DLC, Advertising Agency, Registrars and Statutory Auditors in making the IPO a grand success. A commendation letter was sent to them in this regard.
The Company acknowledges the involvement of the Government of India in the Ministry of Petroleum & Natural Gas and support of all other Ministries and other agencies in Central and State Governments.
OIL expresses its gratitude and thanks to the Shareholders, Customers, Suppliers and other business partners/associates for their continued co-operation and patronage and also wish to place on record sincere appreciation for the dedicated contribution by the Oil Indians.
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