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IOC board to consider IBP merger

December 17, 2004 11:33 IST

The Indian Oil Corporation board will consider the merger of IBP Company Ltd with it. The meeting is also likely to consider the rate of interim dividend.

Senior IOC officials told Business Standard that the meeting was likely to discuss issues coming in the way of merger.

"The merger is expected to be completed by the year-end," said a senior IOC executive.

Merchant bankers working out the swap ratio for the merger are likely to make presentations to the two boards prior to the IOC board meeting.

The merger, announced earlier this year, has been delayed due to high under recoveries by oil marketing companies, which has resulted in a Rs 69 crore (Rs 690 million) loss to IBP during the first half of the current financial year.

The losses would have affected the swap ratio significantly and led to a delay in finalising the details of the deal.

IBP had earned its highest-ever profit after tax amounting to Rs 214.66 crore (Rs 2.15 billion) during the last financial year.

IBP, a purely retail petroleum marketing company, was taken over by IOC in 2002 after the government disinvested 33.8 per cent of its 59 per cent stake in the company.

Another 20 per cent was picked up IOC through an open offer following the divested. IOC share in the company currently stands at 53.58 per cent.

The residual 26 per cent government share was offloaded in 2003-04 through book building route.

IBP, with about 10 per cent share in diesel and a little over 8 per cent share in petrol sales in the total sales in the country, is the smallest company in the retail business. IOC with 40 per cent and 35.5 per cent share in diesel and petrol sales, respectively, is the largest company in the retail business.

IOC would retain the IBP brand post merger. Officials said the IBP was likely to function as a division of IOC.
BS Economy Bureau in New Delhi