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Monday,25-October-2021

Business

Government looks at exit option while BPCL seeks open offer exemption

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Bharat-Petroleum-Corporation-Ltd

Privatisation bound Bharat Petroleum Corporation Ltd is seeking exemption for successful bidder of the company from mandatory open offer to be made to shareholders of two promoted companies – Petronet LNG and Indraprastha Gas Ltd.

Sources said, the oil refiner is looking to get the Securities and Exchange Board of India (Sebi) to give exemption for the open offers to the successful bidder of BPCL as already done when ONGC acquired a government stake in HPCL.

BPCL is one of the promoters of both PLL and IGL with a shareholding of 12.5 per cent and 22.5 per cent respectively.

The promoter status in these companies means that once BPCL changes hands to new entity post the strategic sale process, its new owners will have to make open offer for another 26 per cent stake in both the promoted companies as per SEBI regulations. This would make BPCL’s acquisition expensive by about Rs 20,000 crore for potential bidders that could further deter interest in company in the time of the pandemic.

“It is right for BPCL to look for exemption from open offer in case of PLL and IGL. But how this exemption is given, needs to be watched as the earlier experience in case of the ONGC-HPCL deal, the promoters of both the firms were the same i.e. the government of India and there was no change of ownership,” said an energy sector expert not willing to be named.

Sources said that open offer exemption has been discussed by BPCL management in their meeting with disinvestment department Dipam. But the thinking in the government seems to be more inclined towards BPCL shedding its promoter status in the two companies by selling stake before its own strategic sale.

Both BPCL and Centre do not want to wane investor interest in the refiner as additional spending could make the already large sized deal further expensive. The sale of government’s 52.98 per cent stake in BPCL is valued at about Rs 55,000 crore at the current share trading price. The requirement for making an open offer for additional 26 per cent to minority shareholders of the company will cost an additional Rs 27,000 crore.

In addition, if open offers has to be made for additional 26 per cent in PLL and IGL, the spending could go up by another Rs 18,000-20,000 crore. Also, IGL and PLL may not give value proposition to bidders who are mostly eyeing BPCL’s oil refining assets and its large retail network.

Sources said that BPCL also does not want to dilute stake in PLL and IGL as it may substantially erode its value.

Business

Equity indices trade lower; Sensex down by over 300 pts

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India’s key equity indices – S&P BSE Sensex and NSE Nifty50 – traded lower during Monday’s early-morning session.

At 10 a.m., the 30-scrip sensitive index traded at 60,504.75 points, down 316.87 points or 0.52 per cent.

The Sensex opened at 61,398.75 points from its previous close of 60,821.62 points.

Besides, the NSE Nifty50 traded at 17,989.40 points, lower by 125.50 points or 0.69 per cent.

It opened at 18,229.50 points from its previous close of 18,114.90 points.

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Business

Nissan, Porsche face action over false emissions information

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South Korea’s antitrust regulator has decided to order Nissan Motor, Porsche AG and their two Korean units to take corrective steps for falsified information over gas emissions of their diesel cars.

Nissan Motor, Nissan Korea, Porsche and Porsche Korea are alleged to have stated false information about gas emissions of their diesel vehicles imported for sale in South Korea, according to the Korea Fair Trade Commission (KFTC).

The KFTC also decided to impose a fine of 173 million won ($146,700) only on Nissan Korea, reports Yonhap news agency.

Illegal software installed in their cars caused gas emission reduction devices to not fully operate during normal driving conditions.

The practice meant that the cars did not meet permissible emission levels, but the automakers falsified such facts in signs attached to their cars, according to the commission.

In September, the regulator fined Audi-Volkswagen Korea and Stellantis Korea a combined 1.06 billion won for similar allegations over gas emissions.

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Fuel price hike paused after 5 days of increase

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The price hike of petrol and diesel paused on Monday after increasing for the last five days to reach their highest-ever levels across the country.

Accordingly, the pump price of petrol in Delhi remained at Rs 107.59 a litre, while diesel prices also stood at Sunday’s level of Rs 96.32 a litre, according to a price notification of state-owned fuel retailers.

In the financial capital Mumbai, where petrol prices increased to Rs 113.47 per litre and diesel to Rs 104.47 a litre, the highest among all metros, there was no further hike in the retail rates on Monday.

The fuel prices remained static on October 18 and 19, but increased for a fourth straight day by 35 paise per litre previously before again rising for five consecutive days between October 20 to 24. There was no change in rates on October 12 and 13.

Diesel prices have now increased on 24 out of the last 31 days, taking up its retail price by Rs 7.80 per litre in Delhi.

Due to the sharp hike, the fuel is now available at over Rs 100 a litre in several parts of the country.

This dubious distinction was earlier available to petrol that had crossed Rs 100 a litre mark across the country a few months earlier.

Petrol prices had maintained stability since September 5 but oil companies finally raised its pump prices last week.

The rates increased on 21 of the previous 27 days taking up the pump price of petrol by Rs 6.40 per litre.

Crude price has been on a surge rising over a three-year high level of over $86 a barrel as global demand remains firm while OPEC+ continues to move s lowly on increasing production.

Since September 5, wthe price of petrol and diesel in the international market is higher by around $9-10 per barrel as compared to average prices during August.

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