Subject: scam in sale of ONGC, GAIL
> March 23, 2004
>
> Press Release
>
>
> The CPI (M) asserts that, it is the money of the people of India which
> has created Navratna PSUs like ONGC and GAIL and the Govt. of the day is
> only a caretaker and proxy shareholder of the national wealth. NDA Govt.
> has no right to liquidate these assets at sunken price to cover up their
> financial profligacy and rickety state of finance. NDA Government
> started its term with selling of 25% of GAIL's share in Nov. 99 at a
> throw away price of Rs.70/- per share, majority of which were acquired
> by M/s British Gas & Enron, competitors of GAIL, and is ending its term
> with another dirty deal of selling grossly under priced shares of
> India's national prestigious companies like ONGC and GAIL.
>
> National Loss - Price Earning Ratio:
>
> Without going into the irrationality of disinvesting/privatising
> profitable and strategic PSUs for making up budgetary deficit, IPO
> offerings of ONGC and GAIL has cost the nation a loss of Rs.5000 to 6000
> crores on a conservative estimate on account of underpricing of shares.
> In the case of ONGC & GAIL, the Price Earning Ratio is ranging from 9 to
> 10. {For ONGC the Earning per share was Rs.74 approx in 2002-2003 and
> for GAIL it was Rs. 19.38. Price offered per share for ONGC is in band
> of Rs.680-750 and for GAIL it is Rs.185}. ONGC, a Fortune 500 company
> and GAIL, the only gas transportation company in the country, are having
> a large equity base compared to private companies and huge reserves as
> well. The international value of such oil-gas based assets in terms of
> price earning ratio would not be under any circumstances less than 15 if
> not 20. How much does the country lose? Based on a minimum price earning
> ratio of 15, the under pricing would be in the range of Rs.5000 to 6000
> crore for sale of 142 million shares of ONGC and 84 million shares of
> GAIL. Yet this is being tomtomed as another shining glory by the Govt.
>
>
> Govt's annual earning from ONGC and GAIL
> Is more than the one time sale of 10% share:
>
> In 2002-03, ONGC paid Rs 3798 crore as dividend, Rs 4500 crore as cess
> (at the rate of Rs 1800/- ton of oil produced while the private oil
> producing companies are exempted from paying the cess) and Rs 12,377
> crore as Central Government duty and taxes (excluding Sales Tax paid to
> the State Governments. GAIL paid Rs 427 crore as dividend, and Rs 1302
> crore as Central Government duty and tax. Thus for the year 2002-03,
> ONGC & GAIL paid Rs 8725 crore as dividend and cess and Rs 13,679 crore
> as Government duties and tax. And still the Government boasts of one
> time sale for Rs 11000 crore of assets which fetches Rs 22,000 crore per
> year to Government exchequer!
>
> Price of IBP share - from Rs 1551 to Rs 620 per share!
>
> When IBP disinvested through strategic sale route in February 2002, IOC
> another PSU, purchased 33% of government shares in IBP at a cost of Rs
> 1551 per share. Later IOC purchased 20% share of IBP from market at the
> same price per share. Now the same Government which had approved
> purchase price of Rs 1551 per share, only two years ago, is now selling
> govt's remaining 26% shares in IBP at a price of Rs 620 per share.
>
> If this is not a scam, then what else it is?
>
> CPI(M) appeals to the Hon'ble President of India who actually holds the
> share on behalf of the people of India to seek explanation form the
> caretaker Govt. on the national loss from this sale at the expense of
> the taxpayer and to put a hold on the share transaction and order for an
> enquiry about these dubious deals.
>
> Name the Share Market Manipulators
>
> The loquacious Disinvestment Minister owes an explanation to the nation
> for suppressing information regarding the identity of the bear cartel
> share market operators who as per his information, had hammered the
> share market, warranting his intervention during the recent
> disinvestment IPOs. The Minister claimed he knew them but did not name
> them. It is not a private matter between the Minister, the Government
> and scam stars. People of this country who have suffered immensely
> because of the share market scams, have the right to ask the Minister to
> share his information with the nation so that punitive action can be
> taken against those who are involved. Otherwise it can be presumed that
> there is a nexus between the Government, share market operators
> speculators and FIIS for manipulating the market where India's pride -
> its national oil companies like ONGC & GAIL are being bartered for a song.
>
>
> ONGC & GAIL - irreplaceable national assets
>
> CPI(M) further ridicules the hullabaloo created on reported fund-parking
> by FIIs or investors like Buffet or Sores in ONGC and GAIL. ONGC has not
> become a fortune 500 company on certification of FI and FIIs. It has
> become a global major because of its own strong fundamentals created by
> sweat and money of people of India. So is GAIL. They are there in spite
> of Vajpayees, Shouries and not because of them. Fis, FIIs, and
> speculators are eyeing them for "creeping acquisition" of these
> irreplaceable national assets - the Navratnas. It is a matter of shame
> that instead of protecting such assets, Govt. is gloating over their
> acquisition by foreign investors.
>
> Data Sheet
> ONGC
>
> Shares offered for sale - 142.51 million (10% of total holding)
> Offer Price - Rs.680-750 per share
> Earning per share - Rs. 74
> (in year 2002-2003)
> Price Earning Ratio - 9.2 to 10.1
> Expected earning from this sale - Rs.9690 crore to Rs. 10,875 crore
> Govt's share after disinvestment - 74%
>
> GAIL
>
> Shares offered for sale - 84.6 million (10% total holding)
> Offer price - Rs.185 per share
> Earning per share - Rs.19.38
> (in 2002-2003)
> Price Earning Ratio - .9.5
> Expected earning fromthis sale - Rs.1565 crore
> Govt. share after disinvestment - 57%
> (25% were earlier disinvested in November 99)
>
> Dividend paid to Govt. of India (Rs. Crore)
>
> 2002-2003
>
> ONGC 3798
> GAIL 427
>
> end
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