Base price at Rs 280 would've saved the day: ONGC ex-chief

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Base price at Rs 280 would've saved the day: ONGC ex-chief

RS Sharma, former chairman of ONGC tells CNBC-TV18 that sentiment seems to have got adversely affected since the ONGC auction did not get fully subscribed. He reitrates that Rs 280 would have a perfect base price.

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Excerpts from After the Bell on CNBC-TV18 Watch the full show » ALSO READ See latest News about ONGC See previous management interviews See what other Experts & Brokerages are saying about ONGC ONGC BSE | NSE 29/05/12 Are Mutual Funds betting on ONGC?

RS Sharma, former chairman of ONGC tells CNBC-TV18 that sentiment seems to have got adversely affected since the ONGC auction did not get fully subscribed.

Being abroad, he could not give a clear picture of whether there indeed is going to be offline transactions post the close of the auction, but the media is flourish with such news.

Sharma reitrates that the price should have been Rs 280 and not Rs 290. "Whoever has taken the decision to keep the base price at Rs 290, I feel that is not correct. It should have been lower than Rs 283; Rs 280 would have been perfectly alright," he says.

The ex-chief feels that ONGC stock price may fall further tomorrow from Rs 288 that it closed at today.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: We were having this exact conversation just 24 hours ago and you were very clear in your assessment that the government should have actually looked at a discount to the current market price and Rs 290 perhaps would have been a tall task for the government to pull off and that's clearly what seems to have happened?

A: I understand, tomorrow again, some offline transactions may take place. Apparently, there is a set back to the sentiment for the ONGC stock since it has not been fully subscribed on the first day, and obviously, the sentiments got adversely affected.

Q: The government when it put out its proposal had said that this would be a one day auction it would close at 3.30 this afternoon, you are the second person who has come on the channel suggesting that there is going to be an offline bid which will allow carrying on till tomorrow afternoon. Where is the information coming from?

A: No. I got this information from some of the business channels. I am out of the country, so I do not have any access to the direct information. That is what I am told that there is going to be some offline transaction also. So if that happens, I do hope it gets fully subscribed, but otherwise, you are absolutely right. In this kind of transaction it is not only important that how much money you collect, issue is the sentiment also.

Also, after that you go through the process, the next day, the market should not close lower than that. There are certain norms. The practice is that the trade has to be respected.

As it is today, I understand, the share price even otherwise has closed lower than Rs 290. That is not a good sign. I reiterate what I said two days back, the base price should have been kept lower than the previous day closing price. Previous day it closed at Rs 283. At least even Rs 280 would have been a good price.

Q: I want to understand what really has gone wrong there. Is it the exuberance of the investment bankers you think or is it the arrogance of the government thinking that they could pull off a premium?

A: No. I being out of the country, I am not in a position to a finger towards who went wrong, where it went wrong. I am just saying about the decision. Whoever has taken the decision to keep the base price at Rs 290, I feel that is not correct. It should have been lower than Rs 283; Rs 280 would have been perfectly alright. I am talking of the issue of the sentiment, but the government has to prove itself for disinvestment, whether through the share buyback or auction route.

Q: Would you now say as Tulsian has been pointing out that for now, for this fiscal, the government should give up on its disinvestment plans, be happy with thousand crore rupees that you have by way of disinvestments in your kitty, let us not try this half-baked half-attempts and try to push something through the disinvestment pipeline?

A: I am not that pessimistic. If something has gone amiss, immediate steps should be taken to correct it. How that will be done, the people those who have decided so far, let them take a view, but it must be corrected. Leaving this thing, it is going to harm the investments sentiments for all other stocks. If today, the share price has closed at Rs 288, you take my word, tomorrow it is going to fall further.