Hindustan Petroleum Corporation (HPCL) is unlikely to buy the Aditya Birla group's 37 per cent equity stake in Mangalore Refinery and Petrochemicals (MRPL). It is understood that the Birlas have now asked for a "no object certificate" from HPCL to enable them to find a buyer for their stake.
The HPCL board which met earlier this week unanimously decided that the price sought by the Birlas was unaffordable, sources familiar with the talks added.
The two partners, which have 37 per cent each, have been at loggerheads over the valuation of the Birla stake. While the Birlas have been asking for around Rs 16 a share, HPCL is reported to be willing to offer only Rs 6-7 a share.
When contacted, both HPCL and the Aditya Birla group declined to comment on the issue. Kumar Mangalam Birla has had a series of meetings with petroleum minister Ram Naik to explore the possibility of HPCL buying out the Birla stake. At their meeting last week, the minister gave HPCL 10 days to decide on the issue.
Sources said: "The Birlas' asking price for its equity in MRPL is too high. HPCL cannot afford it as it is committed to setting up the 9 million tonne per annum Guru Gobind Singh Refineries at Bhatinda (Punjab)."
HPCL is setting up the new refinery at a cost of Rs 9,806 crore. The subsidiary will soon issue Rs 900 crore in optionally fully convertible debentures (OFCD) and an equity of Rs 100 crore.
HPCL has guaranteed payment of the interest and principal amount to debenture holders investing in the OFCD.
If they get an NOC, the Birla group can scout for buyers for their equity in MRPL. The group may soon send feelers to private and other public sector companies such as Indian Oil Corporation and Bharat Petroleum Corporation.
When contacted, IOC officials said that the corporation had "no interest" in picking equity in MRPL. "There is no market for any petroleum refinery at the moment".
Analysts point out that the demand-supply situation has completely changed with Reliance Petroleum commissioning its 27 million tonne refinery at Jamnagar.
