Investors to move court over Kochi Refinery swap ratio

Kochi Refinery Investors Forum is planning to go to court against the swap ratio for the merger of Kochi Refinery with BPCL.

Rajya Sabha MP from West Bengal Dinesh Trivedi is going to appeal to the Company Law Board against the ratio.

The swap ratio announced was 4:9, which means, four equity share of BPCL for nine shares of KRL.

BPCL is now quoting at around Rs 405 and KRL at Rs 175-176.

However, the KRL stock touched 52 weeks high of Rs 243 in December 27, 2004, following good third quarter result.

There was a stiff fall in KRL counter after January 17 after the declaration of merger ratio.

Criticising the swap ratio, the investor forum wrote to KRL investors that it was against natural justice. It has demanded a swap ratio of 10:8.

"We have no option but to go to the Kerala High Court against this," the letter sent to the shareholder says.

Rajya Sabha MP Dinesh Trivedi, who is also an investor in KRL, supported the move of KRIF by saying that he would supplement the initiative by filing a petition before CLB against the merger.

According to him, the proposed merger ratio is unfair because the ratio of EPS of BPCL and KRL is 3.7:3.2. "The rate of growth of net profit of KRL is more than that of BPCL," he said.

According to Trivedi, the swap ratio was declared based on the results and price till March 31, 2004. But since then the situation has changed.

KRL posted a net profit of Rs 288 crore in quarter ended December 31, 2004 compared to Rs 109 crore in the third quarter of 2003-04.

BPCL's net profit has dipped from Rs 488 crore in the third quarter of 2003-04 to Rs 145 crore in the quarter ended December 31,2004.

Public shareholding in KRL is around 15.56 per cent.

FIIs hold around 5.37 per cent, BPCL another 54.81 per cent, the Kerala government 5.06 per cent and FIs the rest.