ONGC to give Rs 450 crore 'comfort letter' to MRPL

MRPL will be able to draw upon the money for its working capital requirements as and when it needs it, according to Subir Raha, chairman and managing director of ONGC and the chairman of MRPL.

Under the rejuvenation campaign chalked out for MRPL, ONGC has embarked on a substantial reduction in interest costs on working capital borrowings.

MRPL is now considering several options to achieve substantial reduction in interest costs on long term rupee loans, Raha added. It is estimated that MRPL will post a loss of Rs 188 crore in 2003-04 compared with Rs 41 2 crore loss posted in 2002-03.

"We are still looking at ways on how to minimise losses," Raha added.

The ONGC chief was briefing newspersons after attending the first annual general meeting of MRPL here. ONGC bought the AV Birla group's 37.5 per cent equity in MRPL.

ONGC now holds 72 per cent equity in MRPL, while the holding of Hindustan Petroleum Corporation (HPCL), the other promoter of the company apart from Birla, has come down to 17 per cent.

Meantime, MRPL has, for the first time, achieved its full rated capacity of 9.69 million tonne per annum (mtpa) in September, four years after its second phase was commissioned in 1999.

It processed 867 TMT of crude during August 2003 achieving a capacity utilisation of 107 per cent, its highest ever.

Besides working capital requirement, ONGC has also drawn upon the crude plan with 100 per cent term contracts.

ONGC is also providing sweet crude from Bombay High as well as it receives equity crude from Great Nile project in Sudan.

"MRPL will draw upon the support and assistance from ONGC by way of equity crude and product supply," he added.

MRPL is proposing to invest around Rs 600 crore to upgrade its manufacturing facilities to produce motor spirit and high speed diesel to conform to Bharat II and Bharat IV standards.

The company will also invest close to Rs 75 crore for manufacturing of mix xylenes, which will add value to the product mix profile.

Briefing mediapersons, Subir Raha, chairman and managing director of ONGC and the chairman of MRPL, said, "We have drawn several schemes to de-bottleneck and upgrade existing facilities to improve capacity utilisation and cut costs. The mix-xylene projects will add to the profitability of the company."

MRPL will unveil its first retail outlet under ONGC brand in Mangalore.

"It will be a test outlet for branding strategy. We have planned retail outlets in 2004-05. We will move slowly and steadily in the retail marketing strategy, Raha added.

Raha said the company is making small investments such as a capex of Rs 10 crore for variable speed drives for energy saving which will have a pay-back period of 12 months. MRPL has already embarked on this capex project this month.

While another capex of Rs 3 crore will look into implementation of advanced process control with a payback period of 9 months.

Raha categorically ruled out any capacity expansion for the time being at MRPL.