The board of directors of Cochin Refineries Ltd has proposed to merge joint venture Cochin Refineries-Balmer Lawrie Ltd (CRBL), with Cochin Refineries, with a tentative swap ratio of one Cochin Refineries share in exchange for 26 shares of CRBL.
According to a notice to the stock exchanges, the financial issues will be discussed and finalised with the other major promoter of CRBL, Balmer Lawrie & Co .
One of the leading manufacturers of steel barrels, Balmer Lawrie & Company Ltd is a subsidiary of the petroleum products and marketing firm IBP Company Ltd. IBP, in which the government holds 59.58 per cent, is the only firm which does not own a refinery.
To meet the challenges of a liberalised market, it is understood that IBP Co is gearing up for a merger with an oil refiner.
According to Balmer Lawrie's corporate review of 1997-98, the company has been trying to formulate a plan to restructure or reorganise its associate company Cochin Refineries-Balmer Lawrie.
The company has been reviewing the equity structure as the company's performance has been adversely affected due to adverse market conditions and steep increase in input costs.
Since the plan had not crystallised, its financial impact on the company was not ascertained
and dealt with in the last fiscal 1997-98, stated the company's corporate review for the last financial year.
Meanwhile, the company's turnover for the year stood at Rs 5.08 crore. Coupled with the year's loss of Rs 10.07 crore, the carryforward loss has been Rs 28.20 crore.
Due to adverse market conditions and steep increase in input costs, particularly the feed price, the company's production was severely affected.
In fact, the production had to be stopped since September 1997, the management stated in its corporate review.
The much awaited government legislation making it mandatory to use polybutene in 2T oil manufacture would give CRBL the necessary boost and bring the operations back to viability.
