New Delhi, Feb 9 (PTI) Hindustan Petroleum Corp Ltd (HPCL) today said its merger with Mangalore Refinery and Petrochemicals Ltd (MRPL) should happen at the earliest as there exist lot of synergies between them.
Oil and Natural Gas Corp (ONGC), Indias biggest oil and gas producer, last month completed the acquisition of HPCL for Rs 36,915 crore.
After this takeover, ONGC has two refining subsidiaries - HPCL and MRPL.
HPCL Chairman and Managing Director Mukesh Kumar Surana said it makes sense to bring the two companies under one fold.
However, no discussion has yet been initiated on the merger, he said, adding that the board of ONGC, HPCL and MRPL would consider such a proposal once discussions and modalities of the merger have been worked out.
"I believve that if there is a value (in the merger), it should be created at the earliest," he said.
For one, HPCL sells more petroleum product than it produces and bringing MRPLs 15 million tonne a year refinery under the fold would help bridge the shortfall.
Also, there can be synergies in crude oil procurement as well as in optimising refinery set-up.
ONGC plans to maintain HPCL as an independent listed company under whom all its downstream units can be consolidated.
MRPL, in fact, originally was built by HPCL in joint venture with A V Birla Group. ONGC in 2003 acquired Birla Group stake and made it its subsidiary. HPCL continues to hold minority stake in MRPL.
While ONGC holds 71.63 per cent stake in MRPL, HPCL has 16.96 per cent.
After ONGC completed acquisition of the governments 51.11 per cent shares, HPCL has become its subsidiary.
HPCL has added 23.8 million tonne of annual oil refining capacity to ONGCs portfolio. This together with 15 million tonne refinery of MRPL will create Indias second-biggest state-owned oil refiner after Indian Oil Corp (IOC).
Overall, it will become the third biggest refiner behind IOC and Reliance Industries.
MRPL will be the third refinery of HPCL, which already has units at Mumbai and Visakhapatnam. PTI ANZ SA