Calcutta, April 1: The proposed merger between Kochi Refinery Ltd (KRL) and Bharat Petroleum Corporation (BPCL) may run into rough weather with a section of the refinery filing petition against the move in Kerala High Court.

Shareholders, under the banner of the Kochi Refineries Shareholders? Forum, have moved the court, while a south-based financial company ? Indian Syntan Investment Ltd (ISIL) ? has approached both the Kerala RoC and Company Law Board (CLB) Chennai against the merger proposal. ISIL has about 3 lakh shares in KRL.

The forum is opposing the merger, claiming that the process is unfair for small investors. It says the swap ratio of 9:4 is completely biased in favour of BPCL and there was nothing for the minority shareholders.

The swap ratio has destroyed the shareholders? value as the share price of KRL dropped by 16 per cent on the day the merger ratio was announced. It fell from Rs 221 to Rs 186 apiece.

At present, the share price of KRL is hovering around Rs 160.

BPCL holds a 54 per cent stake in KRL.

Generally, swap ratios are fixed after considering net worth per share of the two companies, earning per share, net profit margin, free cash flows, liabilities of the companies, including those relating to VRS for employees.

According to the forum, none of the above parameters will justify the 9:4 swap ratio between BPCL and KRL.

For instance, returns on net worth is 28.6 per cent for BPCL and 35.41 per cent for KRL.