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Friday, Jan 25, 2002

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HPCL okays Birla group plan to hike MRPL stake

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NEW DELHI, Jan. 24

HINDUSTAN Petroleum Corporation Ltd has agreed to the A.V. Birla group's proposal to raise its equity in Mangalore Refineries and Petrochemicals Ltd (MRPL) to 51 per cent from the present 37.5 per cent.

This will help the A.V. Birla group obtain a better valuation for its investment in MRPL as a new partner will get a controlling stake in the company.

Currently, both HPCL and the A.V. Birla group are equal equity partners in MRPL. The increase in equity holding for the A.V. Birla group will be through a rights offering by MRPL where HPCL will renounce its rights.

At a board meeting held in Mumbai , the HPCL board cleared A.V. Birla group's proposal.

As per the proposal, MRPL, through a rights offering, will issue fresh shares amounting to Rs 200 crore at a face value of Rs 10 per share. In turn, HPCL will forego its rights entitlement, thereby enabling the A.V. Birla group to increase its stake to 51 per cent.

Following this, HPCL's stake will drop to around 29 per cent. In the process, the equity infusion in MRPL will help reduce the debt component of the project.

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