MRPL: Birlas may approach IOC again if HPCL opts out

Prasanna Upadhyay

Mumbai, Dec 2: The AV Birla group is likely to resume talks with Indian Oil Corporation to pick up its 37 per cent stake in Mangalore Refinery and Petrochemicals (MRPL) if Hindustan Petroleum Corpn (HPCL) refuses to pick up the stake.

Sources said the AV Birla group is awaiting a communication from its joint venture partner HPCL on buying out its stake. The group officials were unavailable for comment.

The HPCL board, in turn, is awaiting approval from the ministry before a communication is sent to the Birlas. Sources said if HPCL, which has the first right of refusal, turns down the Birla group’s offer, IOC would be the likely choice since it had earlier expressed its keenness to pick up the Birla stake in the JV. While the Birlas are demanding Rs 14-17 per share, HPCL is believed to be sticking to its offer of Rs 6-7 per share.

The Financial Express had earlier reported that IOC was interested in the Birla stake in return for management control in MRPL. Sources said Birla group and IOC had held talks in the past, but since HPCL had the first right of refusal, the Birla group was pursuing the matter with its JV partner.

While IOC officials had stated that it was too early to talk about gaining management control before hiking its stake in MRPL, they added, “There are many other options.” IOC, in turn, is awaiting the HPCL decision to pursue the issue full steam.

Industry sources pointed out that IOC could increase its stake by infusing fresh investments in MRPL which was in need of fresh funds as the debt equity ratio was rather high at 4.2:1. The company had invested about Rs 171 crore in expanding refining capacity from last year’s 3 million metric tonne per annum (MMTPA) to 9 MMTPA.