By IANS
New Delhi : The union cabinet Friday approved the sale of 49 percent equity of Bharat Shell Ltd, a joint venture of Shell India and Bharat Petroleum Corp Ltd (BPCL), to Shell or its affiliate for Rs.1.5 billion cash.
The proposed sale will enable BPCL to withdraw from the joint venture that has a competing business interest — production and sale of branded lubricants in India — and to concentrate on building and promoting its own brand of lubricants, a government spokesperson said.
The BPCL’s board of directors gave its approval to the company’s management earlier this year to go ahead with the proposed equity sale.
Bharat Shell was incorporated in 1993 to market Shell-branded lubricants in the country.
The joint venture had an authorised capital of Rs.2.5 billion and a paid-up capital of Rs.2 billion.
Shell holds 51 percent equity in the company.
BPCL took 49 percent stake at an investment of Rs.980 million. Its holding value though, fell to Rs.245 million after the paid-up value was reduced to Rs.2.5 a share.
The joint venture holds eight percent share in the one million tonne lubricant market in the country.
Shell now wants to keep 100 percent share in the JV as part of its strategy to intensify its focus on the lubricants business.
It has ruled out roping in a new partner for its lubricants business.
The oil multinational has also indicated that it might change the name of the JV company to remove “Bharat” from it.
Both Shell and BPCL have their own established lubricant brands in the market.