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IBP buy will de-risk business, says Pathan

Our Bureau

HYDERABAD, Feb. 21

THE acquisition of IBP by Indian Oil Corporation (IOC) is a positive step towards de-risking in the highly competitive sector, according to Mr M.A. Pathan, Chairman of IOC. The price was also good, he added.

"We will complement each other than compete,'' Mr Pathan said, while indicating a restructuring of the management of the IBP shortly to consolidate in the market.

IOC had recently acquired 33.58 per cent of Government's equity in IBP, which is primarily a retail marketing company at a consideration of Rs 1,153.68 crore.

"The acquisition will not only strengthen our marketing presence but is also expected to significantly contribute to the growth of the company in the coming years," he told newspersons. Commenting on the benefits of taking over IBP, Mr Pathan said before the acquisition, IOC had 300 marketing outlets in which it had invested around Rs 425 crore. This number has been boosted by the addition of 1,552 outlets of IBP, with a rough investment of Rs 3,000 crore.

A hidden advantage was the location of these outlets in strategic locations. The addition has straightaway resulted in an increase of 8.4 per cent in market share for IOC — 7.4 per cent in petrol and 9.3 per cent in high-speed diesel segment — Mr Pathan said.

The new acquisition comes close on the heels of IOC picking up a major stake in Chennai Petroleum and Bongaigaon Refinery and Petrochemicals Ltd, which are two stand-alone refining companies in the South and north-eastern regions respectively, the IOC Chairman, who is participating in the 11th International Aviation Conference here, said.

Referring to IOC's globalisation plans, Mr Pathan said it had opened offices in Kuwait, Malaysia, Mauritius and the UAE to explore new business opportunities. In Mauritius, it has set up a subsidiary.

The Mauritius subsidiary is set to start activities on March 9 and complete the first phase in 12 months. The projects include a network of 25 petrol stations, a state-of-the-art oil terminal and aviation fuel facilities, he said.

On its joint venture project to set up a DME (dimethyl ether) plant, Mr Pathan said the exit of BP from the project was a setback and had delayed it.

"We are scouting for alternatives and two companies from West Asia have shown interest and we are negotiating,'' he said.

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