ONGC holds a 71.63 per cent stake in MRP and HPCL has 16.97 per cent. The public stake is 11.42 per cent. With the current market capitalisation of Rs 22,232 crore of MRP, the additional 34 per cent HPCL will have to buy from ONGC to take a majority would cost Rs 7,558 crore.
“If this happens, it will be advantageous for HPCL in terms of crude sourcing and product availability in South India. MRP can create an incremental capacity, too, for HPCL in the south, reducing dependence on private players, where its demand is higher than refining capacity,” said Dhaval Joshi, research analyst at Emkay Global Financial Services.
However, industry experts believe that this is unlikely to happen. Both because it might not help the government in meeting its divestment target and also because ONGC might be reluctant to sell its stake.
ONGC acquired 37.38 per cent stake of Aditya Birla Group in MRP in March 2003 for Rs 60 crore. At the time, HPCL owned 37 per cent in MRP. Following this, ONGC infused equity capital of Rs 600 crore, making MRP its subsidiary. “It was ONGC that turned around the company, talking to the lenders and coming up with a debt restructuring package, which even included conversion of debt into equity. Hence, it is highly unlikely that ONGC will give up its stake,” said R S Sharma, former ONGC chairman and head of the hydrocarbon committee at business chamber Ficci.
There are reports of resentment within the HPCL management and employees over the ONGC wishing to take it over. And, that the plan to acquire MRP might have been mooted for this reason.
On Friday, the MRP scrip ended at Rs 126.85, down 0.9 per cent from its previous closing of Rs 127.95 on the BSE exchange.