Mangalore: The government is planning to merge Mangalore Refinery and Petrochemicals Limited (MRPL) with Hindustan Petroleum Corporation Ltd (HPCL). The decision came after the Oil and Natural Gas Corporation (ONGC) acquired HPCL five years ago. The move will help ONGC to streamline its downstream vertical.
After the acquisition of HPCL by ONGC, there were plans for the merger of HPCL and MRPL. However, it took five years for the ministry to start the execution of the plan. Now the ministry is working on the HPCL and MRPL merger, which will mainly be a share-swap deal.
Earlier ONGC chairman Arun Kumar Singh had hinted that the company will start working on the process soon. To streamline its business, ONGC will be merging with MRPL to consolidate its refining and petrochemical business around MRPL.
The merger is expected to boost the refining capacity of HPCL, which is capable of selling extra in the market, despite its current limitation of refining capacity.
It would take longer for ONGC to complete the merger, given the long process of documentation and approvals. MRPL is a publicly listed company and the process would be carried out as per SEBI rules. Not just MRPL, HPCL, and ONGC are also listed companies and it would take a little longer for their merger into a single entity provided a long set of legal formalities to be done before the merger.
Before the beginning of MRPL’s merger with HPCL, the former had completed the acquisition of OMPL. Multiple mergers and acquisitions reflect the oil ministry’s effort to bring most of its energy entities under a single umbrella. OMPL was also jointly promoted by ONGC and MRPL. Their shareholding stood at a ratio of 49 and MRPL share price at 51 per cent.
The acquisition of OMPL into MRPL was completed in December last year with 100 per cent of compulsorily convertible debentures. OMPL was founded on June 19, 2006. It mainly produces paraxylene and benzene, which are mainly exported by the company.
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