Encouraged by the "positive response" for the roadshow to attract investment here, the Indian government will now try to get a higher price for its 10 per cent share in Oil and Natural Gas Corporation, currently on offer to international investors, a senior official has said.
An eight-member high-level delegation led by petroleum secretary B K Chaturvedi spent a day in London on Monday, meeting prospective investors in ONGC, India's most valuable company worth Rs 1,06,000 crore (Rs 1,060 billion) which earned a profit of Rs 10,529 crore (Rs 105.29 billion) in 2002-03.
The government had announced a price band of Rs 680-750 per share for the sale of 10 per cent equity constituting 14.26 crore (142.6 million) shares in ONGC through a book-built public offer. It is the largest ever public offer in India's corporate history with the government targeting over Rs 10,000 crore (Rs 100 billion) from the issue. The public offer, which opened on March 5, will close on March 13.
The delegation arrived here after holding a roadshow in Singapore. Before the London ONGC roadshow, the delegation met investors in Edinburgh.
"We met a large number of institutional investors and there was a very good response. They asked a lot of critical questions in the context of India's liberalisation. We have been able to convince them. Their response was absolutely positive," divestment secretary Dirender Singh told PTI.
"Now we have to build up on a higher price within the price band announced by the government," he said.
Finance secretary D C Gupta, who was also present said: "The response -- both in Edinburgh and here -- was quite positive. Many look at India as a place for long-term investment and many have already invested there, earning good dividends."
The delegation included ONGC chairman Subir Raha and senior officials of ONGC. Besides representatives of DSP Merrill Lynch, Kotak Mahindra Capital Company and JM Morgan Stanley, lead managers to the issue were also present.
The delegation left for the United States last night on its next leg to attract investment. It will have roadshows in New York and Boston.
According to ONGC sources, the company has set an ambitious target for 2020. It plans to discover six billion tonnes of oil and gas by then.
Around 27 oil rigs will be drilled under project Sagar Samridhi. Through its subsidiary OVL, it is aggressively going beyond Indian seas to acquire oil and gas fields. OVL's target is procuring 20 million tonnes of oil and gas by 2020. It hopes to start procuring that much by 2011.
ONGC's old workhorse -- Mumbai High -- is being overhauled and expanded by spending Rs 8,200 crore (Rs 82 billion) between 2001 and 2006. The efforts have borne fruit. In the past three years new discoveries have been more than production.
Yet, to minimize the risks inherent in the exploration business, ONGC is getting into refining and retail. It will start setting up its petrol pumps in 2004-05. That will put it in league with global oil majors that own the entire oil chain from exploration to retail. Government willing, ONGC could witness a windfall, the sources said.