New Delhi, June 13: ONGC has decided to exercise its option to pick up another 20.9 per cent stake at par value in Mangalore Refineries and Petrochemicals Ltd (MRPL) which is currently held by banks and financial institutions. The total cost of this stake is expected to be around Rs 370 crore.
The option to buy this 20.9 per cent stake forms part of the debt restructuring package for the ailing refinery signed between ONGC and the financial institutions. Under this agreement, ONGC has the “right to purchase a part or the whole equity, within a period of five years, at par value of Rs 10 compounded annually at 10.08 per cent”.
A senior ONGC official told The Telegraph that the stock market price of the MRPL share is currently hovering at twice this value.
On the Bombay Stock Exchange, the share today opened at Rs 20.60, rose to a high of Rs 23.50 before closing at Rs 23.
He said that the proposal to purchase the 20.9 per cent stake would be first cleared by the ONGC board and the petroleum ministry would also be sounded on the move. The offer would then be formally made to the financial institutions.
ONGC has invested Rs 600 crore by way of equity in MRPL and holds a 51 per cent share in the company. It had bought the Aditya Birla Group’s 37 per cent stake in the company at a price of Rs 2 for each share which had a par value of Rs 10. The total amount paid for this stake was Rs 60 crore.
MRPL was a joint venture between Hindustan Petroleum Corporation (HPCL) and the Aditya Birla group. ONGC is also keen to buy out HPCL from the venture but the latter has until now refused to sell its stake.
Although MRPL is a state-of-the-art refinery and has shown excellent results in terms of crude throughput, it landed in a financial mess as payments for the petroleum products were held up due to red tape. It had to take recourse to heavy borrowing and as a result ran into losses. The debt burden rose to a crushing Rs 4,500 crore.