IOC Unveils Rs 22,000 Crore Rights Issue to Fuel Growth Initiatives
Indian Oil Corporation Ltd (IOC) has announced its plans to raise Rs 22,000 crore through a rights issue of equity shares. This capital infusion is part of the government’s initiative to support the net-zero carbon emission projects of three state-owned fuel retailers. The funds raised will be utilized to drive sustainable practices and reduce carbon emissions within IOC’s operations. This move highlights the company’s commitment to transitioning towards cleaner energy solutions and aligning with the government’s environmental goals.
The rights issue of equity shares will enable IOC to generate the necessary capital to fund its net-zero carbon emission projects. By issuing equity shares to existing shareholders, the company aims to raise Rs 22,000 crore in capital. This initiative reflects IOC’s dedication to embracing sustainable practices and contributing to global efforts to combat climate change. The funds raised through the rights issue will support the development and implementation of environmentally-friendly initiatives within the company’s operations.
The capital raised through the rights issue will play a crucial role in driving Indian Oil Corporation’s transition towards a greener and more sustainable future. The funds will be directed toward projects aimed at reducing carbon emissions and promoting renewable energy solutions. By infusing capital into the net-zero carbon emission projects, IOC is positioning itself as a leader in the energy sector’s sustainability efforts, contributing to the country’s broader goals of achieving carbon neutrality and a cleaner environment.
As the majority owner of IOC, the government is expected to subscribe to the rights issue and infuse equity into the company. This capital infusion will support IOC’s initiatives in the net-zero carbon emission projects and contribute to its growth and sustainability goals. In a similar move, Bharat Petroleum Corporation Ltd (BPCL) has also approved a rights issue to raise to Rs 18,000 crore.
The decision to raise capital through a rights issue reflects IOC’s commitment to strengthening its financial position and funding its strategic initiatives. By issuing equity shares on a rights basis, the company provides an opportunity for existing shareholders to participate in the capital raise.
The approval for the rights issue aligns with the government’s strategy to infuse capital into state-owned fuel retailers to support their net-zero carbon emission projects. This move highlights the government’s commitment to promoting sustainable practices in the energy sector and accelerating the transition towards cleaner and greener energy sources.
The capital raised through the rights issue will provide IOC with the necessary resources to invest in innovative technologies, research and development, and infrastructure upgrades to achieve its sustainability objectives. It also reinforces the government’s focus on creating a more environmentally-conscious and resilient energy industry in India.
After the announcement of IOC’s plans for a rights issue, the company’s stock witnessed a positive response in the market. On Friday, the closing trading price of IOC’s scrip on the Bombay Stock Exchange (BSE) was Rs 99.4, reflecting a 0.8% increase compared to the previous trading day. This upward movement indicates investors’ confidence in the company’s capital-raising plans and its commitment to sustainable energy initiatives.
The government’s support for the capital infusion in state-run fuel retailers, including IOC, was highlighted in the annual Budget for the fiscal year 2023-24. As part of the budgetary provisions, the government announced capital support of Rs 30,000 crore to BPCL, IOC, and HPCL. This capital injection aims to bolster the companies’ efforts in energy transition and net-zero initiatives, emphasizing the government’s commitment to promoting sustainable practices in the fuel retail sector. The capital support will enable IOC to accelerate its transition towards cleaner energy sources, enhance its infrastructure, and contribute to India’s goals of achieving net-zero carbon emissions.
Overall, the positive market response and the government’s capital support signify a positive outlook for IOC and its endeavors in sustainable energy transition. The company is well-positioned to leverage the rights issue and the government’s backing to further its net-zero initiatives and solidify its position in the evolving energy landscape.
HPCL, being majority-owned by Oil and Natural Gas Corporation (ONGC), is expected to secure capital through a preferential share allotment to the government. This move will enable HPCL to fulfill its capital requirements and support its energy transition initiatives, aligning with the government’s focus on promoting sustainable practices in the fuel sector.
In a strategic step to strengthen its financial position, IOC recently increased its authorized share capital to Rs 30,000 crore. This enhancement provides IOC with the flexibility to raise the required capital through various means, including the proposed rights issue. By doubling its authorized share capital, IOC demonstrates its proactive approach to securing adequate funds and facilitating its growth plans, particularly in the realm of sustainable energy.
With both IOC and HPCL taking decisive measures to raise capital, the state-owned fuel retailers are well-positioned to enhance their financial resources and expedite their transition to cleaner energy sources. The infusion of capital will enable these companies to invest in infrastructure, research and development, and technological advancements to achieve their net-zero carbon emission goals.
These developments highlight the government’s commitment to supporting the energy transition of state-owned fuel retailers and facilitating their contribution to India’s broader sustainability objectives. By strengthening the financial foundations of IOC and HPCL, the government aims to foster a more resilient and environmentally conscious energy sector in the country.
Indian Oil Corporation Limited (IOC) has announced the formation of a joint venture (JV) company for the battery swapping business in India. The JV will be established as a private limited company with a 50:50 collaboration between IOC and Sun Mobility Pte Ltd Singapore (SMS). IOC plans to invest Rs 1,800 crore in equity till the financial year 2026-27 for this venture. The board has approved the investment of USD 78.31 million in IOCL Singapore Pte Ltd, a wholly-owned subsidiary of IOC, for the acquisition of preference shares and warrants of SMS. These investments are subject to the necessary statutory and regulatory approvals.
The establishment of the joint venture reflects IOC’s strategic focus on exploring opportunities in the evolving electric mobility sector in India. Battery swapping is an innovative solution that addresses the challenges of electric vehicle charging infrastructure and range limitations. By partnering with Sun Mobility, a leading player in the battery swapping space, IOC aims to leverage its expertise in energy distribution and create a robust ecosystem for electric vehicle adoption.
The investments in IOCL Singapore Pte Ltd demonstrate IOC’s commitment to strengthening its presence in international markets and expanding its portfolio of energy-related businesses. This strategic move aligns with IOC’s long-term vision of diversifying its operations and exploring growth opportunities beyond the domestic market.
With these initiatives, IOC is positioning itself as a key player in the clean energy transition and sustainable mobility solutions. The battery swapping business and the investment in IOCL Singapore Pte Ltd are expected to contribute to IOC’s strategic objectives and enable the company to play a significant role in India’s electric mobility ecosystem.
