Bongaigaon Refinery merges with IOC

Our Bureau

Kolkata, March 25 Assam-based Bongaigaon Refinery and Petrochemicals Ltd (BRPL) has merged with parent IndianOil with effect from today. With this IOC's business consolidation process comes to a near end. The company is now left with the last major subsidiary of Chennai Petroleum Corporation Ltd (CPCL).

Having started the consolidation process with the merger of Assam Oil in October 1981, IOC has merged its lube manufacturing facility Indian Oil Blending Ltd (IOBL) and petroleum product retailer IBP Ltd with itself in May 2006 and May 2007 respectively.

Though the company has tried in the past to merge CPCL, however, the discussion could not progress much reportedly due to the resistance of its Iranian partner National Iranian Oil Company, which holds a minority 15 per cent stake in the company.

When asked whether IOC was still interested in merging CPCL with itself, the IOC Chairman Mr Sarthak Behuria, said the company was not considering any such proposal. "We have just completed one merger and there is no more merger proposal on board right now," he added.

BRPL merger

In a press communiqué issued today, IOC said that the merger was effected on March 25 at a swap ratio of 4 equity shares of Rs 10 each of IndianOil for every 37 equity shares of Rs 10 each of BRPL. The Record Date for this purpose shall be notified in due course.

With merely six days left for the financial year 2008-09, sources say that the merger is unlikely to have any significant impact except proportionate growths in topline and profits on IOC's balance-sheet for the year. However, beginning next fiscal the merger will have a positive impact on IOC's bottomline by way of avoiding double taxation on product transfer from Assam to the plains in West Bengal. According to available estimates, the double taxation now makes the group poorer by Rs 80 crore.

More importantly, IOC may now go for a capacity expansion of 2.35 million tonne in BRPL to take the advantage of tax breaks in the State by pumping imported crude through Paradip-Haldia- Barauni- Guwahati pipeline network.