Indian Oil Corporation Cancels Rs 22,000 Crore Rights Issue
New Delhi [India], September 30: Indian Oil Corporation Limited (IOCL) has decided to withdraw its previously proposed rights issue of equity shares amounting to Rs 22,000 crore. This decision was made during the company’s Board meeting held on September 30th, following the government’s decision not to allocate funds for capital support to oil marketing companies (OMCs) in the Union Budget for 2024-25.
This move marks a reversal from the company’s earlier announcement on July 7, 2023, where the Board had approved plans to raise capital through a rights issue, subject to necessary statutory approvals. The proposed allocation of Rs 30,000 crore for capital support to OMCs, anticipated in the Union Budget, did not materialize, with the Ministry of Petroleum and Natural Gas (MoP&NG) confirming that no funds had been earmarked for the purpose.
In light of the government’s non-participation, IOCL’s Board decided to withdraw the rights issue during the meeting. The company secretary, Kamal Kumar Gwalani, confirmed the withdrawal in a regulatory filing, stating, “In view of the Govt. of India’s (Promoters) non-participation in the Rights Issue, the Board has decided to withdraw the proposed issue of equity shares.”
IOCL had initially planned to raise the funds to support its capital expenditure and expansion projects. However, the government’s decision has impacted these plans, and the company is now reassessing its capital-raising strategy.
The board meeting also comes in the context of IOCL’s other business moves, including the formation of a joint venture with Sun Mobility Pte. Ltd. for battery-swapping services in India. The company’s ambitious investment plan includes a Rs 1,800 crore infusion into this venture by FY2026-27, alongside other international investments.
Doubts Revealed
Indian Oil Corporation Limited (IOCL) -: IOCL is a big company in India that sells petrol, diesel, and other fuels. It is one of the largest oil companies in the country.
Rs 22,000 crore -: Rs 22,000 crore is a very large amount of money. In Indian currency, ‘crore’ means ten million, so Rs 22,000 crore is 220 billion rupees.
rights issue -: A rights issue is a way for a company to raise money by giving its existing shareholders the chance to buy more shares at a special price.
Union Budget -: The Union Budget is the annual financial statement presented by the government of India. It shows how the government plans to spend and earn money for the coming year.
capital support -: Capital support means financial help or funds provided to a company to help it grow or manage its operations.
company secretary -: A company secretary is a senior position in a company responsible for ensuring that the company follows legal and regulatory requirements.
Kamal Kumar Gwalani -: Kamal Kumar Gwalani is the name of the person who is the company secretary of IOCL.
joint venture -: A joint venture is a business arrangement where two or more companies work together on a specific project or business activity.
Sun Mobility -: Sun Mobility is a company that provides energy solutions, like battery-swapping services, to make electric vehicles more convenient to use.
battery-swapping services -: Battery-swapping services allow electric vehicle owners to quickly exchange their empty batteries for fully charged ones, making it easier to keep their vehicles running.
