We understand an open offer will not apply, says D K Sarraf

Oil and Natural Gas Corporation (ONGC) is the country’s biggest oil and gas producer. But with global crude oil prices hovering around $50 a barrel, it wants to neutralise its risk of the subdued market through a significant downstream presence. In an interview with Jyoti Mukul, its chairman and managing director D K SARRAF says integration with Hindustan Petroleum Corporation (HPCL) will be beneficial for both the companies: Edited excerpts: 
 
Will ONGC be buying government stake of 51 per cent in HPCL?
We will acquire the entire government stake in HPCL.
 
How will the takeover help your company?

The strength of integrated companies is higher. ONGC will become a truly integrated company. It will now include both upstream and downstream businesses of refining, marketing and petrochemicals. Its strength will be more than ONGC and HPCL, individually. 

 
Will the takeover trigger an open offer to minority shareholders under Securities and Exchange Board of India rules since it’s a sale of more than 25 per cent equity?
We understand it will not apply to us.
 
How will you fund the buy-out? Since your reserves may not be sufficient, will you raise loan or sell your cross-holding in other oil public sector undertakings?

We will chalk out a funding plan. The ONGC board will have to take a view on it.
 
Does it make commercial sense to have two downstream subsidiaries - HPCL and Mangalore Refinery & Petrochemicals (MRPL)? Wouldn’t it be better to merge them instead?
HPCL and MRPL are independent companies. Their boards will have to take a call.
 
But ONGC will be the promoter of both the companies.
The ONGC board will take a decision based on what HPCL and MRPL boards decide.