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Wednesday, Jan 23, 2002

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CPCL to consider IAL sell-off to Chevron on Jan 28

Balaji C. Mouli

NEW DELHI, Jan. 22

CHENNAI Petroleum Corporation Ltd (CPCL) will consider a proposal shortly to sell its equity stake of 50 per cent in Indian Additives Ltd (IAL) to its joint venture partner, Chevron Oronite Company LLC.

The proposal will be taken up at the forthcoming board meeting on January 28. The move to sell its equity has been triggered by Chevron Oronite's perception of a conflict of interest.

Chevron Oronite also has a 50 per cent equity stake in the joint venture. The multinational lube major has argued that the Indian Oil Corporation (IOC) besides having a controlling stake (51.81 per cent) in CPCL also has a 50 per cent stake in IAL's competitor in the lubes market, Lubrizol India Ltd (LIL).

Sometime in June last year, Chevron Oronite made it clear to CPCL that either IOC should divest its stake in LIL or CPCL should exit from IAL.

Following this, CPCL set up a committee to review the issue. The committee recommended divestment of CPCL's equity in IAL before the end of the current fiscal, if Chevron Oronite does not relent on its stand.

The efforts mounted by CPCL and IOC to convince Chevron Oronite that IOC's stake in LIL did not pose any threat to IAL's position in the market, however, was in vain.

CPCL is now keen to sell off its stake in IAL since the company is set to post losses during this fiscal.

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