Financial Times

Lanka IOC to raise Rs 3.6 bln through IPO
After being postponed on several occasions, the Lanka IOC IPO is finally opening on November 29 with the company planning to raise Rs 3.6 billion. LIOC is hoping to raise this through an issue of 100 million shares (with an option to issue a further 33.33 million shares in the event of oversubscription) at a price between Rs. 23 and Rs. 27. The price for the offer - representing a 25 percent stake in the company will be decided using a 'book building' exercise, according to a report by Asia Research.

Proceeds from the issue would be used to renovate fuel sales outlets (Rs 1.5 billion), build a lubricant blending plant (Rs 500 million) and to renovate storage tanks at the Trincomalee tank farm (Rs 1.5 billion), the report said.

In 2002, LIOC was assigned 100 filling stations situated throughout the country that were hitherto operated by the Ceylon Petroleum Corporation (CEYPETCO). In addition to these outlets LIOC has been able to attract about 70 franchisees to its countrywide network. The reports said the company is aggressively embarking on its expansion in Sri Lanka and planning to have 220 outlets in its network by the end of 2005, and 300 by 2007.

The report said the business growth for the company is expected to accrue from expanding its retailing network, planned entry into bunkering now controlled by Lanka Marine Services, the LPG and supply of jet fuel now handled solely by CEYPETCO.

The company plans to develop Trincomalee into a bunkering hub. LIOC is a subsidiary of Indian Oil Corporation Ltd (IOCL) that has six subsidiaries in India and two subsidiaries in Mauritius and Sri Lanka. IOCL is engaged in refining and marketing of petroleum products.

LIOC in the year to March 31, 2004 recorded revenues of Rs 14.5 billion and an after tax profit of Rs 578 million. The present market share of the company for the main petroleum products stand at 28% (with CEYPETCO having a share of 72%) and in lubricants a market share of 18% (with Caltex Lubricants having a major share of the balance 82% of the market).

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