ONGC, HPCL may prune stake in MRPL to meet Sebi's public holding norms

New Delhi: State-owned Oil and Natural Gas Corp (ONGC) and Hindustan Petroleum Corp Ltd (HPCL) may sell a part of their stake in Mangalore Refinery and Petrochemicals Ltd (MRPL) to comply with regulations on minimum public holding. Public shareholding in the Mangalore-based refiner is currently just 11.42 percent, not even half of the mandatory 25 percent public float required by the Securities and Exchange Board of India (Sebi) for listed companies.  PSUs have been asked by Sebi to comply with the public shareholding requirement by August next year. The Board of MRPL will meet on 1 August for approval options to raise public shareholding up to 25 percent as per Sebi directive, a senior official said. The options before the board is either the promoters divest a part of their shareholding through an offer for sale (OFS) or MRPL issues fresh shares through a public offer, he said. ONGC currently holds 71.63 percent stake in MRPL while HPCL has 16.96 percent. As much as 23.2 crore shares will have to be sold through on OFS if the two promoters were to sell part of their stake. The offer size will be much larger if the company decides to go for an OFS by issuing fresh shares, he said. Even in case of fresh shares, shareholding of the two promoters, who currently between them hold 88.58 percent of MRPL, will come down. ONGC had in 2003 bought Aditya Birla Group’s 37.4 percent stake in MRPL for Rs 59.43 crore at Rs 2 a share and infused additional Rs 600 crore capital. The buyout and additional capital infusion raised its stake to 51 percent. Originally, HPCL and Aditya Birla Group were equal partners in MRPL with 37.4 percent stake each; the remaining 25.2 percent was with the public. Post ONGC-sponsored restructuring of the then loss-making MRPL, HPCL’s stake fell to 16.9 percent. Lenders to MRPL also agreed to the Debt Restructuring Package (DRP) proposed by ONGC, which included conversion up to Rs 365 crore of their loans into equity. This led to lenders holding about 20.8 percent in MRPL while public holding came down to 11.3 percent. Subsequently, ONGC acquired equity allotted to the lenders pursuant to DRP raising its holding in MRPL to 71.62 percent. The official said MRPL board on 1 August will also consider raising up to Rs 3,000 crore as part of capex plans through issuance of non-convertible debentures or bonds. MRPL was set up in 1988 with the initial processing capacity of 3 million tonnes. Under ONGC, its capacity has risen to 15 million tonnes per annum.