Indian Oil to merge IBP by December 2004

Indian Oil Corporation, the Fortune 500 company, will merge IBP with itself by December 2004. The merger of another subsidiary Chennai Petroleum Corporation and Bongaigaon Refinery & Petrochemicals with IOC has, however, been kept on the backburner.

Speaking on the sidelines of the company's 45th AGM, M S Ramachandran, chairman and managing director of IOC, said: "There is no tax or legal roadblock. We have appointed J P Morgan Chase & Co to advise on the merger and IBP has chosen HSBC Holdings Plc." IOC bought the government's stake in IBP at Rs 1154 crore in 2002 as part of the disinvestment programme.

"IOC now proposes to merge IBP with the parent company, keeping in view the similarity of businesses and the possible synergies and economies of scale between the two companies. While the government of India has accorded in-principle approval for the merger, action is underway to complete the process by December 2004," said Ramachandran in his speech to shareholders today.

Even as merger of IBP with IOC is expected to sail through by end 2004, IOC intends to continue with IBP brand. "Our intention is not to dispense with IBP brand as it has great loyalty. We will continue with the brand even after the merger," Ramachandran added.

July quarter loss pegged at Rs 1300 crore: Meanwhile, the company expects a loss of over Rs 1,300 crore in the first quarter ended July 2004 on account of selling liqufied petroleum gas (LPG) and kerosene at prices below its cost of production.

M S Ramachandran, chairman and managing director of IOC, told shareholders here today that the corporation has lost due to substantial under-recovery on account of selling of LPG at lower prices. Last year, the total under-recovery on these subsidised fuels for IOC were close to Rs 2,352 crore.