Hindustan Oil Exploration Company clocked double-digit gains at the bourses after ENI Spa announced sale of its 24.75 per cent stake in HOEC to Ashok Goel of Ashok Goel Trust and MD of Essel Propack. Speaking to Bloomberg TV India, HOEC Managing Director P Elango says it is purely a financial investment by Ashok Goel through the Ashok Goel Trust and Dhoot Industrial Finance. Since HOEC already has two other strong financial partners — Indian Oil Corp and Oil India Ltd — it really doesn’t need any money to complete the Assam projects, he said. HOEC will focus on developing the Assam gas field and delivering the first gas from the field by the last quarter of the financial year.

HOEC shares jumped more than 10 per cent after Italy-based ENI Spa said it would sell 24.75 per cent to Ashok Goel Trust. The stake of the promoter ENI, we understand, will come down to around 22 per cent. Why have you decided on the stake sale?

ENI continues to be the promoter. ENI had 47 per cent stake in the company. We have been notified by them and they have done a transaction with Ashok Goel Trust and Dhoot Industrial Finance. Both the Ashok Goel Trust and Dhoot Finance have acted in concert and taken a 24.75 per cent stake. Both the investors as well as ENI have notified us on the transaction and we have in turn notified the exchanges as well and put up the details on the website.

Now, it is known to the market that ENI over the years has made it very clear that while it will support the management team and continue to be on the board of HOEC, it will not be infusing any future growth capital in the company. It has made this public.

So there is a hangover effect of this in the market. But by this transaction, we believe that the financial investors who are joining the shareholders will believe in the tradition of the institution. So we can focus on developing the Assam gas-field and delivering the first gas from the field by the last quarter of the financial year.

Now that the stake sale has been made to the Ashok Goel Trust, which we understand has a connection with Essel Propack, will we see any business synergies between Essel Propack and HOEC?

This is purely a financial investment by Ashok Goel under the aegis of Ashok Goel Trust. We don’t see any synergies between the companies. In fact, ENI continues to be the promoter of HOEC.

My question is that there is no fresh equity issuance, which means that the share capital remains the same. It means that no extra fund is coming to the company rather it is going to the promoters. Is this transaction only because the promoters wanted to partly exit the company, as the company is not getting cash?

Right. The company is not getting any cash through this transaction. This is purely a transaction between the promoter and the new investor. The company has got adequate funds to complete the development of Assam gas-fields.

In Assam, we have got two other strong financial partners — Indian Oil Corp and Oil India Ltd. And the projects are on track. The company really doesn’t need any money to complete the Assam projects. Our first priority is to deliver the Assam project, improve the cash flow of the company, and then take the next phase of raising capital.

As long as we see bankable opportunity in a project, our strategy is to deal with it one at a time and focus our attention on the project.

What is the status of the environmental approval of the AAP-ON-94/1 block in Assam?

The environmental appraisal committee has scheduled a hearing on our application in April. The final hearing by the environmental appraisal committee is scheduled to take place in Delhi. And normally after the hearing, subject to the recommendation made by the committee, it should take about 45 days to get the environmental approval.

Related Topics
comment COMMENT NOW