The Indian Oil Corporation (IOC) is to take a majority stake in the Madras Refineries, though the percentage it is to takeover has not been mentioned.
At present 52.48% stake in MRL is held by the government, 14.29% by National Iranian, 23.20% by the financial institutions, banks and mutual funds and 10.03% held by the public.
The takeover would help MRL survive the deregulated era since its does not have a marketing network of its own. IOC would need a refinery down South to service its marketing netowrk there.
Ironically, MRL supplies its entire 6 million tonne output (it plans to expand to 9 million tonne at a cost of Rs.21.75 bn) to Bharat Petroleum (BPCL). BPCL only has a single seven million tonne based in Mumbai and buys out the entire output of MRL for its south based retail outlets. It was expected that MRL would go to BPCL while Cochin Refineries (CRL), another South based stand–alone refinery would be taken over by IOC.
However IOC’s takeover of MRL is in line with the Nitish Sengupta committee recommendations. The committee has also recommended that CRL, Indo Burma Petroleum and Numaligarh Refineries be taken over by BPCL.
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