Govt asks Indian Oil Corp to mull bonus issue - paper

MUMBAI (Reuters) - India's top state-run refiner Indian Oil Corp Ltd has been asked by the federal government to consider a bonus share issue "in the immediate future", the Economic Times newspaper reported on Saturday.

The company has been asked to consider the bonus issue as its reserves and surplus have risen to about 29 times of its paid-up equity capital, the paper said, quoting an unnamed official from a federal ministry.

Under department of public enterprises guidelines, state-run firms with reserves in excess of three times their paid-up capital should consider a bonus share issue, the paper said.

The federal government, which holds 80.35 percent in the company, will be the biggest beneficiary of a bonus issue.

The paper said IOC was reluctant to issue bonus shares at a time when state-run oil marketing companies were losing 2.4 billion rupees a day due to price caps on fuel retailing. IOC holds about 40 percent market share in domestic fuel retail.

IOC earlier made a 1-for-1 bonus issue in 1999/2000, and another 1-for-2 bonus issue in 2003/04.