The Hindu Business Line : Bongaigaon Refinery, IOC merger unlikely this fiscal as minority shareholders resist

Kolkata, Sept. 19 The merger of Bongaigaon Refinery & Petrochemicals Ltd (BRPL) with Indian Oil may not take place before the end of this fiscal due to investors’ resistance, according to Indian Oil sources.

The merger, it is hoped, will have a positive impact, amounting to Rs 80 crore, on the bottomline of the Assam-based BRPL. This will happen due to the avoidance of double taxation of products and enhancement of capacity utilisation through the use of imported crude.

Having received Cabinet approval last year, both IOC and BRPL obtained shareholders’ approvals for the merger proposal in March this year and almost immediately approached the Department of Corporate Affairs (DCA) for final approval.

Swap ratio

The swap ratio was fixed at four equity shares of Rs 10 each of IOC for every 37 equity shares of the same value of BRPL held. As per the norm, DCA is to clear the proposal on completion of the final hearing of shareholders.

As the situation stands today, repeated hearings convened by the DCA failed to win the minority shareholders.

“The last hearing failed to reach the consensus as a section of minority shareholders had asked for more details on the merger scheme and the swap ratio. We are expecting the next hearing to be held in this regard some time in October,” the sources told Business Line, adding that they were still hopeful that the merger would be completed in the next six months.

The delay in effecting the merger, as the sources point out, is coming in the way of improving the profitability of BRPL which is suffering from low capacity utilisation. The 2.35-million tonne refinery is currently processing 2 mt crude annually.

Since the local demand for the products is low, a large chunk of the production is transferred for marketing to Indian Oil’s Siliguri terminal in West Bengal, leading to double taxation of products, but only half of the tax burden is recovered from the customer.

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