The Burmah Shell (Acquisition of Undertakings in India) Act 1976 enabled the Government of India to take ownership by paying ₹27.75 crore. One estimate of that amount in today’s terms is to use the inflation factor, which is about 22.42 (between the year 1976 and now). This means that the Government would have paid ₹622.06 crore today. The current market value of Bharat Petroleum Corporation Limited (BPCL) varies between ₹85,000 crore and ₹115,000 crore. The government’s share at present is about 53.3% (which it is contemplating selling), that is worth between ₹45,000 crore and ₹61,500 crore. We got the company for a song.
How much has the Government earned meanwhile? Since 2011, the total dividend it has earned is about ₹15,000 crore, which is several times the present value of the investment of ₹622 crore. Let us estimate the present value of all future incomes that the Government would earn. One way is to use inflation and calculate what the value of all future flows would be, based on the present value of all future incomes. The average inflation in the last three years has been 4.5%, 3.6% and 3.48% in 2016, 2017 and 2018, respectively, or an average of 3.86%.
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