The Hindu Business Line : BPCL not in hurry to off-load shares it got through Kochi Refineries merger

BPCL is waiting for its share prices to improve for off-loading of the approximately 3.37 crore own shares available through merger of Kochi Refineries (KRL) with itself.

The merger was recently concluded at a swap ratio of 4:9.

Like all OMC (oil marketing company) shares BPCL shares too had witnessed substantial erosion in value during last two years and is currently ruling at an average price of Rs 354 as against a 52-week high of Rs 502.95 on May 5, 2006.

A back of the envelop calculation suggests that any issue at the current prices would fetch a maximum of Rs 1,200 crore.

"The merger of KRL is concluded. However, we are not considering off-loading of BPCL shares at this juncture", the Director-Finance, Mr S.K. Joshi, told Business Line.

While Mr Joshi is tight lipped about the timing of off-loading, company sources told Business Line that with the recent improvement in liquidity due to softening of crude prices coupled with good market demand for recent issue of oil bonds, BPCL would wait at least till end of this fiscal to take a call on the offloading of shares.

"While our under-recoveries are being taken care of by the oil bonds and upstream sharing, the liquidity has improved in the third quarter. Also unlike last year, oil-bonds issued during October, November and December 2006 carry an attractive coupon rate and was largely sold at a premium," a company official said.

As a net impact the pressure on finances has eased substantially and borrowings are stabilised at less than Rs 6,500 crore during the third quarter.

"We are in a comparatively comfortable situation and may buy some more time to maximise our returns from selling of shares," the official said. With bulk of the winter stock piling is over, the company is hopeful of an even comfortable fourth quarter.

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