Indian Oil Corporation (IOC) has withdrawn its ₹22,000 crore rights issue, a move that caused its shares to dip by 1% to ₹178 in Tuesday’s trading. The withdrawal comes after the Ministry of Petroleum & Natural Gas (MoP&NG) informed the company that no funds had been allocated for Oil Marketing Companies (OMCs) in the 2024-25 budget, despite initial approvals.
IOC had originally planned to raise capital via this rights issue, which was announced in July 2023, subject to necessary statutory approvals. However, following a board meeting on September 30, 2024, the company decided to cancel the issue. The government, which was expected to participate in the capital raise, opted out due to the absence of budgetary allocation for OMCs, leading to the move.
This cancellation has drawn attention to the financial challenges faced by oil companies amid fluctuating global crude prices and government policies. Investors responded cautiously, with IOC’s stock experiencing a minor decline. The rights issue had initially been seen as a significant capital-raising effort, but the lack of government backing has now raised concerns about the company’s future funding strategies.
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