ONGC to offer discount loans to employees to buy its shares

Vol 7, PW 25 (10 Mar 04) News in Brief

On 10th March ONGCs board will consider a proposal to fund the participation of its 38,000 employees in the Rs10, 000cr ($2.17bn) public offer that closes on 13th March.

After board approval, an ONGC employee can receive a loan equivalent to six months gross salary at an interest rate of 4.6%, lower than the 7.25% charged by the State Bank of India. ONGC reckons the cost of helping its employees will be about Rs700cr ($152m).

This decision will spread a lot of goodwill amongst employees, says ASTO (Association of Scientific and Technical Officers) chief Shreedhar Vyas. ONGCs prospectus filed with the Securities and Exchange Board of India contains a commitment to give each of its 38,000 employees a maximum 375 shares out of total 14.25cr shares offered.

The Government of India is selling 10% stake in ONGC. As we write, the issue has been three times oversubscribed.