Business: Govt went all out to salvage ONGC offer

New Delhi / MUMBAIi: It was a couple of hours of pure panic on Thursday the government scrambled to avoid one of India largest disinvestment proposals of belly-flopping.

Of course, the official version is that the ONGC share auction was business as usual. But the truth seems to be that a number of banks and financial institutions were not fully informed about the auction, Life Insurance Corporation (Lic) woke up late for the investment opportunity, a technical glitch almost aborted the last minute rescue operation, and the government was forced to look for the Securities Exchange and Board of India's assistance.

Although the auction to sell 42.78 crore shares began to 9.30am on Thursday, it was not until 2.40 pm, just 50 minutes before the end of the first such sale, that corridor put an offer in favor Lic.

Until then, stock exchanges have shown that proposals are worth less than 3% of the issue size was placed.

While details of the brokerage executing the agreement is available, the corridor punched "self-pay" for the order. At about 3.20pm, disaster struck as the Stock Holding Corporation, the guardian, he canceled the order saying it had not received the payment. As a result, Lic order to buy about 12 crore ONGC shares could not be executed.

This meant the government's decision to sell the shares will not go through, causing much embarrassment in the capital, where the financial ministry was watching the issue very closely.

The disastrous offer to ONGC that closed on Thursday worked on the Friday market to the stock price of the government owned oil exploration major losing 2.2% to close below its offer price of Rs 290. The slide in the stock came despite a relatively flat market with the sensex closed 53 points higher at 17,637. On a weekly basis, however, the sensex closed almost 300 points lower, its second consecutive weekly close with losses.

The other sensex stock who also attended hammering real estate major DLF, which closed about 5% lower at Rs 204. The stock lost ground for the second consecutive session, weighed by a research report by Veritas Investment Research Corp., the Canadian company that had a few months ago raised a red flag on Kingfisher Airlines, only a few days before he flew into a financial crisis.

On Thursday, Veritas said that, at best, the DLF stock would be worth Rs 100, less than half of its current market price.

RIL ups stake in EIH

In another unrelated development, Mukesh Ambanicontrolled Reliance Industries on Friday revealed that it had increased its holding in hotels major East India Hotels, which runs the Oberoi hotel, and related properties to 18.53% by picking up an additional 2.13 crore shares worth Rs 192 crore through an open market transaction.

RIL arm Reliance Industries Investment & Holding bought these shares, which translates to 2.73% of EIH for Rs 90 a piece.

Business

Friday, March 2, 2012

Govt went all out to salvage ONGC offer

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