New Delhi: Global oil major Royal Dutch Shell will buy Bharat Petroleum Corp Ltd’s (BPCL) 49% stake in lubricant marketing firm Bharat Shell Ltd (BSL) for Rs145.80 crore.
BPCL plans to exit the joint venture company, floated in 1993 to market Shell branded lubricants in India, as it has developed a competing product.
Official sources said the Petroleum Ministry has moved a Cabinet note for sale of BPCL’s 49% stake in BSL to Shell. Shell holds 51% stake in BSL.
Besides paying BPCL Rs145.8 crore in cash, Shell will also takeover the state-run firm’s 49% of BSL’s debt amounting to Rs31.2 crore as on March 31, 2006.
BSL incurred losses till financial year 2001-02 but after hiving off its loss-making LPG business, the company showed signs of turnaround and posted a net profit of Rs12.12 crore in 2006-07.
Sources said BSL was formed to strengthen BPCL’s position in the lubricant market by availing the opportunity for blending and marketing high performance speciality lubricants. BPCL did not have its own production of base oil at that time.
Both BPCL and Shell recognised the need for building their own brands independently in India and the state-run firm decided to exit BSL.
Sources said the board of Shell had on 10 May approved share purchase agreement with BPCL to acquire its 49% stake in BSL at a price not exceeding Rs177 crore.
After the acquisition, Shell would remove the ‘Bharat´ name in BSL. Shell currently has operational control of BSL.