NOC looks to increase paid up capital to Rs30b through IPOs
Increase in the working capital will enable the NOC to expand its business portfolio
Jul 31, 2018-Nepal Oil Corporation is mulling over issuing initial public offerings (IPOs) in a bid to increase its paid up capital to Rs30 billion.
The state-owned enterprise has recently increased its share capital by 38 folds to Rs11 billion on the back of its cumulated profits in the last two fiscal years after implementing the automated pricing system in the oil business. The NOC earned Rs 4 billion in net profit in the fiscal year 2017-18.
Of the total 99.46 percent government stake at the NOC, the Finance Ministry has 73.41 percent, Ministry of Industry, Commerce and Supplies (20.32pc) and the Department of Commerce and Supplies Management (5.73 pc). Of the rest, National Trading Limited holds 0.26 percent, Rastriya Beema Company (0.15pc), Nepal Bank Limited holds (0.08pc) and Rastriya Banijya Bank (0.05pc).
NOC Acting Managing Director Sushil Bhattarai said the enterprise’s 48th Annual General Meeting had given a go ahead for the IPOs.
According to him, the NOC has proposed to float shares worth Rs 30 billion to the public and registered itself at the Office of Company Registrar for the purpose.
Last year, the government formed a joint committee comprising representatives from the Finance Ministry, the Office of Auditor General and the Supplies Ministry to study on the matter. “The joint committee had also advised NOC to issue initial public offerings to make the enterprise more liable to the general people,” Bhattarai said.
As per the proposed plan, the NOC will be issuing 30 percent of its share capital to the general public. Of the rest, 55-60 percent of the shares will be allotted to the government, while the remaining 10-15 percent will be allotted to its strategic partners—which are yet to be confirmed. “We have targeted to gradually increase the capital out of our retained earnings in the next few years before fixing the date for the IPOs.”
NOC’s share capital had stood at Rs290 million until the last fiscal year. Citing the growth in business volume year on year, the enterprise has considered increasing its equity capital. Out of NOC’s monthly liability of Rs200 million, it has to pay Rs160 million to Indian Oil Corporation, Bhattarai said. “With the issuance of public shares, we have targeted to distribute the liability as well as to share dividends to the public who are among our key stakeholders.”
Increase in the working capital will enable the NOC to expand its business portfolio. The country’s oil monopoly is planning to import fuel from the third countries, open model petrol pumps, induct high-tech dispenser equipment at the Tribhuvan International Airport, build fuel storage plants with a 90-day supply capacity in each of seven provinces.
Published: 31-07-2018 09:10