ONGC share split gets government nod: Sources

The government today is understood to have approved a share split in oil and gas major Oil and Natural Gas Corporation (ONGC) and issue of bonus shares as a prelude to the company's follow-on public offer in March 2011.

Sources said the cabinet committee on economic affairs (CCEA) approved splitting a share of ONGC with a face value of Rs10 into two shares of Rs5 each.

Besides, it is believed to have approved a 1:1 bonus issue (one share for every share held).

However, no official comments could be obtained.

State-owned ONGC had suggested to the government that the company's stock be split ahead of the FPO -- through which the government plans to sell 5% of its shares and expects to mop up Rs10,800 crore.

After the offer, the government shareholding in ONGC will come down to 69.14% from the current 74.14%.

Shares of ONGC closed up by Rs40.30, or 3.23%, at Rs1,288.50 a piece on BSE today.

ONGC had appointed two international auditors -- DeGolyer and MacNaughton and Gaffney, Cline and Associates -- to certify its oil and gas reserves.

ONGC, which usually gets its reserves audited every five years, is getting a certification in the third year because of the planned FPO.