Hyderabad-based Nagarjuna Oil Refinery Ltd will seek shareholder approval to sell its 46.78 per cent stake in Nagarjuna Oil Corporation, which is setting up a 6 million tonne oil refinery in Tamil Nadu to Allied Machineries and Resources Holdings Inc of Ras Al Khaimah.

NORL has informed the BSE that it plans to sell 77.62 crore shares of ₹ 10 each for a consideration of ₹ 2.50 a share (₹ 194 crore).

The AMR Group is a Dubai-based fund with assets of over $ 2 billion in diversified businesses including aviation, transportation, infrastructure, energy, oil with investors from China, Japan, Korea and the Gulf.

According to the announcement Allied Machineries has made a similar offer to other stakeholders, except TIDCO, the Tamil Nadu government industry promotion agency which holds 1.65 per cent (2.74 crore shares).

The other stakeholders in the project include Trafigura 19.79 per cent (32.84 crore shares); Tata Sons 12.70 per cent (21.07 crore shares); Tata Petrodyne 12.11 per cent (20.08 crore shares); Cuddalore Port Co 3.66 per cent (6.07 crore shares); and Udhe Gmbh 3.31 per cent (5.48 crore shares).

The refinery planned about 100 km south of Chennai on the east coast was touted as the largest private sector investment in Tamil Nadu.

Previoulsy, NetOil Singapore was to have acquired the company but the deal fell through. The project was to have been commissioned in 2002 at a cost of ₹ 3,500 crore but continuous delays and cost overrun have contributed to the project cost mounting to ₹ 12,500-18,000 crore with the possibility of being commissioned in 2017.

At the time of negotiations with Netoil officials had said Tamil Nadu government had also extended a structured package of incentives including VAT refund apart from concessions and subsidies.

A debt restructure was also on the anvil with a consortium of 17 public sector banks having to cut their losses. The total investment in the project was about ₹ 8,000 crore including ₹ 4,500 crore expenditure and ₹ 3,500 crore interest. The banks were to have brought in an additional ₹ 7,000 crore debt as part of the restructure.