Petroleum ministry to reconsider the merger of KRL with BPCL

National Investors' Foundation & others had complained against the deal

The Union ministry of petroleum and natural gas will reconsider the swap ratio announced for the high profile merger of Kochi Refineries Ltd (KRL) with Bharat Patroleum Corporation Ltd (BPCL), according to a letter issued by the director of the petroleum ministry, Pramod Nangia.

He has assured one of the large sharehoders of KRL that the ministry is giving a second thought to the matter.

The letter written to Hansmukhlal G Sheth on March 30, a large shareholder of KRL, says that the matter is under consideration of the ministry.

"Please refer to your letter dated 27.1.2005 regarding swap ratio for BPCL and Kochi Refineries and to inform you that the matter is under consideration of this (petroleum) ministry," the letter said.

Sheth in his letter to the ministry, had suggested that the swap ratio for the merger should be decided only after the audited financial results of BPCL and KRL as on March 31, 2005.

Incidentally, the swap ratio was declared based on the results and price till March 31, 2004.

"The situation has changed since March 2004. 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 fell from Rs 488 crore in the third quarter of 2003-04 to Rs 145 crore in the quarter ended December 31,2004," National Investors' Foundation (NIF) said in its letter to the petroleum ministry.

Earlier, the Kochi Refinery Investors Forum had threatened to go to court against the swap ratio for the merger of Kochi Refinery with BPCL.

The move of KRIF was backed by NIF, which too wrote to the petroleum minister Manishankar Aiyar complaining about the merger.

The Rajya Sabha MP from West Bengal, Dinesh Trivedi, said he would appeal to the Company Law Board against the announced ratio.

The swap ratio announced was 4:9, or four equity shares of BPCL for nine shares of KRL held.

The merger of KRL with PSU oil giant BPCL is being viewed as a first step towards consolidation of oil PSUs.

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

However, KRL stock touched 52 weeks high of Rs 243 in December 27, 2004, following good third quarter result. The KRL counter collapsed after January 17 on declaration of merger ratio.

KRIF along with NIF have demanded a swap ratio of 10:8 for KRL shareholders.

Incidentally, public shareholding in KRL is around 15.56 per cent. FIIs had around 5.37 per cent, BPCL had 54.81 per cent, Kerala government 5.06 per cent and FIs the rest.

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Swap deal rapped

HG Sheth: The swap ratio should be decided only after the audited financial results of BPCL and KRL as on March 31, 2005

NIF: KRL posted a net profit of Rs 288 cr in Q3, 2004-2005 compared to Rs 109 cr in Q3, 2003-04. BPCL's net profit fell from Rs 488 cr in Q3, 2003-04 to Rs 145 cr in Q3, 2004-05