The Hindu Business Line : Only way for IBP to survive is to merge with IOC: Chairman

THE Chairman of IBP Co Ltd and Indian Oil Corporation Ltd, Mr M.S. Ramachandran, today presented a strong case in favour of the former's merger with the latter and said that was the only way to ensure the survival of IBP Co Ltd in the long term.

Addressing shareholders of IBP Co Ltd at the 96th annual general meeting held here, Mr Ramachandran said the oil and lubricants marketing major had, for the first time, posted a loss of Rs 8.6 crore in the first quarter of the current fiscal. In the current quarter, too, it was "not doing too well."

Since IBP Co does not have any refinery and is only engaged in retail marketing of petroleum products, it would augur well for the company to be merged with IOC, which has huge refining capacity, he said.

"The prices of petroleum products are not rising commensurately with the price at which IBP has to purchase them," Mr Ramachandran said.

In his speech at the beginning of the AGM, he said the merger initiative was aimed at "synergising and imparting a competitive edge to our operations by optimising resources, products, strategies, systems and procedures which will, in turn, ensure enhanced shareholder value".

According to him, IOC and IBP would together have a formidable presence in the Indian retail market. Post merger, the amalgamated company would have a 56 per cent market share by volume and control 52 per cent of the retail outlets. Post merger, the identity of IBP Co would be maintained as a division of IOC and "not a single employee of IBP will be retrenched."

Mr Ramachandran said financial advisors had been appointed to delve into the financial parameters of the companies and decide the swap ratio. He said the merger process would be completed by December-end .

IBP Co's shares would be delisted from the Delhi, Madras, Guwahati and Ahmedabad stock exchanges. As such, they would now be listed on the Bombay and Calcutta stock exchanges and the National Stock Exchange.

During the year ended March 31, 2004, IBP Co Ltd registered its highest-ever turnover of Rs 10,233.01 crore, up from Rs 8,723.30 crore in 2002-03. In 2003-04, the company recorded a profit before tax of Rs 332.59 crore against Rs 140.73 crore the previous year. In 2003-04, the profit after taxation stood at Rs 214.66 crore against Rs 87.74 crore in 2002-03. A total dividend of Rs 35 (350 per cent) was declared on equity shares of the face value of Rs 10 each.

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