The valuation report of Mangalore Refineries and Petrochemicals (MRPL), which is being prepared by SBI Capital Markets and Arthur Andersen, will be submitted to the Hindustan Petroleum Corporation (HPCL) board next week.
This assumes significance in the wake of the A V Birla group's decision to exit the venture in which it holds 37.38 per cent stake.
HPCL, the other co-promoter, has already evinced interest in picking up the Birlas' stake.
The valuation will be based on a host of parameters including MRPL's future earnings, net worth and market capitalisation.
The valuation will be done on the basis of the pact signed between the co-promoters, said sources close to the development.
The HPCL board is expected to meet shortly to consider the report. In mid-March this year, following the A V Birla group's decision to pull out of the project, HPCL's sub-committee on investments reviewed the prospects of HPCL buying out the group's stake.
HPCL is reported to have planned to rope in Indian Oil Corporation for a possible buy-out of Birlas' stake.
As per the agreement between HPCL and the Aditya Birla group, HPCL has the first right of refusal for the group's stake.
Apart from HPCL, Kuwait Petroleum Corporation has also shown interest in the stake. Earlier, KPC had held negotiations directly with MRPL for picking up a strategic stake as a third partner. This, however, fell through.
The loss-making MRPL has a nine-million-tonne refinery at Mangalore. The company, which plans to increase its capacity through de-bottlenecking, recently appointed Lazard India as advisors for a financial rejig.
Currently, products from the refinery are marketed by HPCL using its vast retail network. Further, the company is exporting some of its products at a loss, because of lack of adequate domestic demand.
