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Friday, Aug 19, 2005

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Cabinet seeks more details on KRL merger with BPCL

Our Bureau

New Delhi , Aug 18

THE Finance Minister, Mr P. Chidambaram, today said that the Union Cabinet has sought more information on the proposed merger of Kochi Refineries Ltd (KRL) with BPCL.

The Cabinet is understood to have taken up the issue but no decision could be arrived at.

The boards of the two companies had approved a swap ratio of 4:9 in January this year.

BPCL holds 54.81 per cent stake in KRL, which operates a standalone refinery that process 7.5 million tonnes a year.

Post-merger, BPCL is expected to gain an advantage of high refining profit margins.

As part of the merger proposal, the Petroleum Ministry had sought approval for transferring BPCL's shares in KRL to a trust.

These shares could be sold latter and used for financing the company's expansion programmes.

However, the Finance Ministry had opposed the move to transfer the shares to a trust and proposed that BPCL should extinguish its shares in KRL - a move that would have resulted in the Government's holding in BPCL being reduced to 60.58 per cent.

Meanwhile, the Cabinet has given its approval for removal of drugs and pharmaceuticals from the list of industries for which industrial licence is compulsory, since drugs and pharmaceuticals are governed by a different Act.

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