The Hindu : ONGC to acquire HPCL stake in MRPL

Online edition of India's National Newspaper
Wednesday, Jan 07, 2004

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ONGC to acquire HPCL stake in MRPL

NEW DELHI JAN. 6. The Union Finance Ministry has consented to Oil and Natural Gas Corporation (ONGC) buying out Hindustan Petroleum Corp Ltd (HPCL) in loss-making Mangalore Refinery and Petrochemicals Ltd (MRPL).

"The Finance Ministry yesterday convened a meeting of top oil Ministry and ONGC brass to seek certain clarification on the state-run firm's proposal. After deliberating the pros and cons at length, the Finance Ministry gave its go ahead,'' sources in Government said here.

The meeting was convened on the Petroleum Ministry's cabinet note seeking approval of ONGC buying out HPCL's 16.95 per cent stake in MRPL.

The proposal to buy HPCL's 29.72 million shares will now be put before the Cabinet for final approval, sources said adding if approved, the ONGC stake in MRPL will climb to 87.95 per cent.

ONGC had last year bought out the Aditya Birla group's 37.4 per cent stake in loss-making MRPL for Rs. 59.43 crores at Rs. 2 per share. It infused additional Rs. 600 crores as fresh capital as part of a debt-restructuring package.

"The acquisition price will be decided as per SEBI norms,'' they added.

The ONGC board had on September 24 decided to submit a formal proposal to the Ministry of Petroleum and Natural Gas for ONGC's intent to acquire the entire shareholding of HPCL (29.72 million shares being 16.97 per cent of aggregate equity capital of MRPL) at a price of about Rs. 37.75 per share.

But since then MRPL scrips had soared and going by the acquisition price may change accordingly, they added.

Sources said MRPL would for the time being continue to remain as a subsidiary of ONGC but did not rule out its merger with ONGC at a latter stage. Last year's DRP, which also included cutting interest rate, pre-payment of part debt and rescheduling repayment of remaining, brought down debt-equity ratio from 15.02:1 to 2.83:1. After the exercise, ONGC had 51.25 per cent stake in MRPL while joint venture partner HPCL's stake came down from 37.4 per cent to 16.97 per cent. Later in the year, ONGC bought out 20.9 per cent stake held by banks and financial institutions in MRPL for around Rs. 370 crores.S — PTI

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