Indian Oil Corporation, which holds 53.6 per cent in IBP, would not bid for the government's residual stake in the company, merchant bankers associated with the issue said. IOC is, however, silent on the issue.

The government flagged off road shows for the sale of its residual 26 per cent stake in IBP through a book-built public offering, which will open on Monday.

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Retail investors will get the shares at a discount, which will be announced later, to the cut-off price for qualified institutional buyers and other institutional investors.

The IBP share on Thursday closed 3.86 per cent lower at Rs 695.15 on the Bombay Stock Exchange.

The offer for the 5.76 million shares of Rs 10 each will close on March 1 and the price band will be announced prior to the opening of the bid.

Qualified institutional investors will get up to 50 per cent of the shares on offer, while at least 25 per cent will be reserved for retail investors. The shares would be allotted proportionately, IBP managing director Arun Jyoti told the media on Thursday.

After the offer, the public shareholding in the company will increase from 20.4 per cent to 46.40 per cent.

S Mukherjee, managing director of ICICI Securities, the lead book manager to the issue, said the reason for announcing the floor price just one day prior to the opening of bids was that the shares were already listed and "there is a lot of fluctuation in the market price".

The floor price will be pegged to the prevailing market price and will be decided by the company in consultation with the lead managers.

Dwelling on the company's growth plans, Jyoti said IBP would continue with its strategy of opening more retail outlets and brand building in 2004-05.

IBP has set up 446 outlets in the current financial year up to December 31, 2003. It would also focus on its explosives and cryogenics business to boost revenue and earn better margins, Jyoti added. He, however, declined to elaborate on the future plans, citing the norms governing the public issue.

The company had reduced its operating costs and trimmed its workforce by 15 per cent to 2,205 in the past three years, Jyoti said.

Adding, "We are not planning another retirement scheme and will operate with the same manpower."