Although no firm proposal has been made or considered at the board level, top company officials are in favour of the Petroleum Ministry's opinion for 1:2 bonus issue (one bonus share for every two shares), highly placed company sources said.

Company officials indicated that good financial performance during 1998-99 and expectations of even better results in the first half of the current fiscal could improve the prices of the IOC stock and the government should wait for such time before deciding on the timing of disinvestment.

Officials explained that lack of liquidity had hampered trading of the IOC stock and the present price was not a real indicator of the strength of the company's scrip. Therefore, the bonus issuecould increase the floating stock by half to about five hundred and fifty lakh shares could be easily traded, they said. IOC employees and financial institutions have about nine per cent stake in the company.

The government holds 81 per cent of 390 million shares while 10 per cent is owned by another oil giant -- Oil and Natural Gas Corporation (ONGC). Thus 91 per cent of the stock was least likely to be traded, officials said.

In case the government goes ahead with disinvestment in the month of June or July then the bonus issue during 1999-2000 would not be possible, they said.Once the Petroleum Ministry okays the idea it would have to be taken for consent of the Finance Ministry and then we could moot a formal proposal at our board, sources said.

IOC's global coordinators Goldman Sachs and Credit Suisse First Boston (CSFB) also did not appear to be in favour of disinvestment at this stage but a final view will be taken on the issue by the ministry's task force on IOC's disinvestment shortly, thesources added.

IOC, mandated to disinvest up to 10 per cent of its equity, did not come up with a domestic issue towards the end of the last financial year due to adverse market conditions which saw its scrip plummeting to just above the Rs 200 range. However, Indian Oil Corporation shares have regained some of the lost ground and was quoted at about Rs 329 at the BSE, albeit much lower than the Rs 529 high in the last one year.