IOC-Lubrizol deal to be finalised by July-end

Merchant bankers working out details of the pricing said it was likely to be finalised within two weeks and a decision to conclude the deal would be taken in the next two months, sources said.

Lubrizol India is a joint venture company promoted by government and US Multinational Lubrizol Corporation for selling lube oils and additives for the automobiles and other allied industries.

The government has 60 per cent holding in the company while the US firm holds the balance 40 per cent.

According to the agreed deal the government would part away with its equity in favour of IOC, which in turn would dilute its stake by 10 per cent to the multinational company making Lubrizol India a 50:50 joint venture.

The decision to sell off government equity to IOC was taken to accommodate the demand of Lubrizol Corporation for an equal stake in the Indian venture.

A team of Lubrizol Corporation officials had visited the petroleum ministry and also held talks with IOC officials last month regarding the deal, IOC sources said.

The decision to appoint merchant bankers to work out the pricing of the shares of Lubrizol India was taken as it was not listed in the stock markets.

Lubrizol Corporation had asked government for hiking its stake in the joint venture company by 10 per cent and is reported to have not made any new technology transfer due to the delay in decision by the Indian partner, sources said.

With the decision of the government to part way with its equity in favour of IOC and also accommodate the multinational company, Lubrizol India is also likely to go in for restructuring, sources said.

According to the proposed restructuring plan, the chairman and director finance of Lubrizol India would be a nominee of the Indian partner and the managing director of the company would represent the multinational company, they said.

The directors in the board of the joint venture company would be in equal participation.

IOC and Lubrizol corporation are also evaluating other new strategies for restructuring the joint venture company to make it more competitive in the globally changed scenario.