BPCL exits Bharat Shell, sells 49% stake

Global oil major Royal Dutch Shell will buy Bharat Petroleum Corporation's (BPCL) 49 per cent stake in lubricant marketing firm Bharat Shell (BSL) for Rs 145.80 crore.

BPCL plans to exit the joint venture company, floated in 1993 to market Shell-branded lubricants in India, as it has developed a similar product.

Official sources said the petroleum ministry had moved a Cabinet note for the sale of BPCL's 49 per cent stake in BSL to Shell. Shell holds 51 per cent stake in BSL.

Besides paying BPCL Rs 145.8 crore in cash, Shell will also take over the state-run firm's 49 per cent of BSL's debt amounting to Rs 31.2 crore as on March 31, 2006.

BSL incurred losses till 2001-02, but after hiving off its loss-making LPG business, the company showed signs of a turnaround and posted a net profit of Rs 12.12 crore in 2006-07.

Sources said BSL was formed to strengthen BPCL's position in the lubricant market by availing of the opportunity for blending and marketing high-performance speciality lubricants. BPCL did not have its own production of base oil at that time.

Both BPCL and Shell have recognised the need for building their own brands independently in India and the state-run firm has decided to exit BSL.

Sources said the board of Shell had on May 10 approved the share purchase agreement with BPCL to acquire its 49 per cent stake in BSL at a price not exceeding Rs 177 crore.

After the acquisition, Shell will remove the Bharat name in BSL. Shell currently has the operational control of BSL.