The Hindu Business Line : HPCL not willing to sell its 16.95% stake in MRPL

Company's stand
The company says that the MRPL investment brings value through "strategic business interest" like rights over marketing of MRPL products.
It had recently made a fresh bid to acquire the residual stake in MRPL

Kolkata , May 6

Repeated efforts by ONGC and the impending financial crisis (owing to mounting under-recoveries) notwithstanding, HPCL is not willing to part with its residual 16.95 per cent stake in MRPL on ground of "strategic business interest".

At current prices, the 16.95 per cent stake in MRPL works out to over Rs 1,500 crore.

Taking a cue from IOC's initiative to raise finance by selling its cross-holding in ONGC, the exploration and production major had recently made a fresh bid to acquire the residual stake in MRPL. A proposal in this regard was also placed with the Union Ministry of Petroleum and Natural Gas.

According to a senior government official, though the "request" did find favour with the ministry, HPCL has refused to budge.

Apparently, it maintains that the MRPL investment brings value through "strategic business interest" like rights over marketing of MRPL products.

"Our stand on MRPL continues to be the same," an HPCL official told Business Line. "There is no denying that our finances are strained owing to the two-year long crude price volatility. However, it is not so bad that we have to sell our investments," he added.

Industry sources, however, feel that HPCL is waiting for maximisation of the value of its investment. It may be mentioned that soon after acquiring the said stake from A V Birla group (at Rs 2 per share) in March 2003 and commissioning a restructuring programme, ONGC had approached HPCL with a proposal to acquire HPCL's entire holding of 29.71 crore shares in MRPL at a price of about Rs 37.75 per share.

HPCL, however, opposed the pricing formula, which took September 2003 as the cut off date. Though MRPL shares had shown signs of stagnation at around Rs 50 for almost ayear now, ONGC has made it clear that MRPL would lead its foray in downstream sector.

The company has also announced a Rs 12,000-crore integrated upgradation plan and a host of other initiatives, which may lead to substantial gains to shareholders in the future.

"There is little hope of striking the deal at this juncture", a senior ONGC official said.

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