ONGC approves stock split, bonus issue

The board of state-owned Oil and Natural Gas Corporation (ONGC) approved a special dividend of Rs 32 per share, a stock split and a bonus issue, the company said.

ONGC will split equity shares of Rs 10 face value into two shares of Rs 5 face value. Furthermore, the board approved a 1:1 bonus share issue - one new share being issued for every existing equity held by shareholders - as a precursor to the company's planned follow-on public offer (FPO) in March, 2011.

After the share split and bonus issue, the market value of ONGC's shares will dip to around Rs 335, as against Thursday's trading price of Rs 1,328 on the Bombay Stock Exchange and it is expected this will be an attractive level for retail investors to subscribe to the company.

On December 1, the Cabinet had approved sale of government's 5 per cent stake in ONGC through a follow-on or further public offer (FPO) to raise an estimated Rs 13,000 crore (Rs 130 billion).

Following the offer, the government's stake in ONGC would come down to 69.14 per cent from 74.14 per cent at present.

ONGC has already appointed two international auditors - DeGolyer and MacNaughton and Gaffney, Cline and Associates - to certify its oil and gas reserves, a prerequisite for any exploration firm going for a public offering. The reserve certification is expected by month end, Sharma said.

The company, which usually gets its reserves audited every five years, is getting certification done after just a three-year gap this time because of the planned FPO.