The country’s largest company by revenues, Indian Oil Corporation (IOC), is getting a tad bigger. It is merging one of its public listed subsidiaries Bongaigaon Refinery & Petrochemicals Ltd (BRPL) with itself. The proposed merger which was cleared by the boards of both the government owned companies in November 2006, was awaiting government approval which has come now.
The merger may not be too beneficial for IOC in terms of gaining size because IOC would have already been consolidating its figures as it holds more than 74% in BRPL. But after the merger IOC will be able to set off losses suffered by BRPL at standalone level in its books to lower taxes.
BRPL recorded its second consecutive quarterly loss in the October-December period (Rs 224 crore), as against IOC which reported standalone profits of Rs 2,958 crore. The merger swap ratio has been fixed at 4:37 i.e. 4 equity shares of Rs 10 each of IOC for every 37 equity shares of Rs 10 each of BRPL.
The merger is marginally favourable for BRPL shareholder at the ruling stock price (as of 2.45 PM) of Rs 392 for IOC and Rs 41.4 for BRPL. The merger is to be effective from March 25, 2009. The record date for this transaction is yet to be finalised.
This is the second merger move by large corporate entity this month. In early March, the country’s most valued firm Reliance Industries had announced a merger with its public listed subsidiary Reliance Petroleum.