ONGC Board gives nod to explore Group restructuring options
New Delhi: The board of state-owned Oil and Natural Gas Corp (ONGC) has given in-principle approval for exploring options for a restructuring of the group firms including the merger of subsidiaries MRPL and HPCL.
The India's largest oil and gas producer, ONGC has several subsidiaries and joint ventures including two in refining sector - Hindustan Petroleum Corp Ltd and Mangalore Refinery and Petrochemicals Ltd and two petrochemical units - ONGC Petro additions Ltd (OPaL) and ONGC Mangalore Petrochemicals Ltd. It also has an overseas investment arm in ONGC Videsh Ltd.
"The board of directors of ONGC, at the 308th meeting held on June 29, accorded its in-principle approval for exploring options for the restructuring of ONGC group companies," the company said.
While ONGC did not provide details of the proposed restructuring, sources in the company said an advisor would be appointed to suggest possible options.
The board of the company will take a call on the options suggested by the advisor. ONGC is looking at trimming down the structure by merging some of the subsidiaries.
While MRPL operates a 15 million tonnes a year refinery at Mangalore in Karnataka, HPCL has two refineries at Mumbai and Vizag. OPaL has built at Rs 32,000 crore petrochemical complex at Dahej in Gujarat, while ONGC Tripura Power Co Ltd (OTPC) operates a 726 MW power plant at Palatana in Tripura.
It also has two SEZ companies - Dahej SEZ Ltd and Mangalore SEZ Ltd. Also, it has a pipeline company in Petronet MHB Ltd and a stake in helicopter service operator, Pawan Hans Ltd as well as Petronet LNG Ltd. Sources said while there is certainly a case for merger of MRPL with HPCL for not just business synergies but also help avoid penalties from market regulator SEBI for not meeting public float requirement in case of the former. Also, some other units too can be combined.
In the regulatory filing, ONGC referred to the acquisition of government's stake in HPCL earlier this year as part of government's proposal to create a public sector 'oil major' which will be able to match the performance of international and domestic private sector oil and gas companies.