BPCL To Reward Shareholders Post Numaligarh Refinery Sale

Bharat Petroleum Corp. will pay a dividend to its shareholders after the sale of its entire stake in Assam-based Numaligarh Refinery Ltd. is completed.

“We will hold an extraordinary general [meet] on March 25, and the process [stake sale] will be completed by March 31,” N Vijayagopal, director-finance, at the state-owned oil marketer, told BloombergQuint over the phone. The company's board, he said, will meet to discuss the dividend payout after the transaction is completed.

“We will announce dividend for the shareholders, the extent of which will depend on board deliberations. We have to see whether it will be done in this month or part of the fourth-quarter results,” Vijayagopal said.

According to Motilal Oswal Securities, BPCL can announce an incremental dividend of Rs 38 apiece after the stake sale. The state-owned company has already announced an interim dividend of Rs 16 apiece in the third quarter of FY21, enhancing shareholders' reward.

BPCL used to get around Rs 600 crore in dividend from Numaligarh annually. This year it received a dividend in the quarter ended December. “There's some cash in Numaligarh, we will have to see based on cashflows whether there will be another dividend before the sale,” said Vijayagopal.

BPCL's board has approved the sale of its 61.25% stake in the Numaligarh Refinery for Rs 9,876 crore ahead of the divestment of the state-run refiner-retailer.

The proposal includes the sale of 45.36 crore shares (Rs 10 each) of Numaligarh Refinery to a consortium of Oil India Ltd. and Engineers India Ltd. (48% stake), and to the Government of Assam (13.65%), according to an exchange filing. The deal is subject to approval from BPCL shareholders.

The pricing, Vijayagopal said, is based on valuations done by the consultants appointed by the Department of Investment and Public Asset Management and Oil India. The price per share of Rs 217 reflects the benefit the Numaligarh enjoys being in the northeast where it can retain 50% of the excise duty on fuel products, he said.

BPCL will also acquire 36.62% from Oman Oil in Bharat Oman Refinery Ltd. (Bina refinery) for Rs 2,400 crore. “We are in touch with the Madhya Pradesh government to acquire the stake. We want to make it a 100% subsidiary and merge with the company,” said Vijayagopal.

BPCL Divestment

BPCL will be ready for its divestment process with the completion of the Numaligarh Refinery sale.

“We are ready with the data room for bidders,” Vijayagopal said. “The government has to provide us with the details of bidders. The process will be very fast from our end. The government is looking to close the process by June-July.”