Business

Notional loss in BPCL sale plan at ₹4.5 lakh cr.

Value ladder: An officers’ body said that recent transactions by peers in the market highlighted the valuation differential.

Value ladder: An officers’ body said that recent transactions by peers in the market highlighted the valuation differential.   | Photo Credit: Reuters

The divestment of Bharat Petroleum Corporation Limited (BPCL) a state-owned oil firm, is likely to fetch the government ₹74,000 crore, including control premium of 30% for its 53.29% stake in the company, but would also cause a ‘notional loss’ of ₹4.46 lakh crore to the country, given that its market price of total assets exceeds ₹9 lakh crore, according to Public Sector Officers Association.

According to the association, which has the support of the Federation of Oil PSU Officers (FOPO) and Confederation of Maharashtra Company Officers Association (COMCO), BPCL’s assets are valued at more than ₹9 lakh crore according to the replacement value method.

The government’s 53.29% stake is worth about ₹5.2 lakh crore, according to the calculation presented by the association.

The worth of assets totals ₹7,50,730 crore — including, for example, ₹1,76,500 crore for refining capacity, ₹80,000 crore for terminals, ₹1,50,870 crore for retail outlets, ₹11,120 crore for pipelines, ₹22,700 crore for brand value, ₹46,000 crore for the upstream business and ₹98,500 crore for the gas business, ₹82,440 crore valuation of joint ventures, ₹53,000 crore of cross-holdings, ₹7,800 crore of LPG installations, ₹5,200 crore for land, ₹2,800 crore for aviation stations, ₹1,800 crore for lubricants business, ₹2,000 crore for marketing immovable assets and ₹6,300 crore for tangible assets.

The total amount will go up to ₹9,75,980 crore if control premium of 30% — or ₹2,25,218 crore — is added.

Mukul Kumar, convenor, FOPO and COMCO, told The Hindu, “We will write to the Prime Minister tomorrow to remind him not to sell BPCL to any private or foreign player. We will seek an appointment to present other alternatives to the government.”

BPCL has 24% market share among oil PSUs and reported net profit of ₹7,132 crore on a turnover of over ₹3.37 lakh crore in FY19.

‘No benefit to anyone’

“Against the current preliminary indicative market price of the total assets of BPCL of ₹9 lakh crore (in-house estimates), there would be a minimum notional loss of ₹4.46 lakh crore to the country. Besides, the disinvestment is not going to benefit the company or the country in any manner.

“The move will not add to productivity, competitiveness, revenue earning potential, technology or manpower skills,” he said.

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Printable version | Sep 26, 2020 7:11:31 PM | https://www.thehindu.com/business/notional-loss-in-bpcl-sale-plan-at-45-lakh-cr/article30269996.ece

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