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ONGC 'serious' on MRPL merger

Joydeep Ray in Ahmedabad | January 23, 2004 09:53 IST

Oil and Natural Gas Corporation is seriously considering merger of Mangalore Refinery and Petrochemicals Ltd with itself.

This follows its acquisition of the stake of Hindustan Petroleum Corporation Ltd in MRPL, a move that was cleared by the finance ministry during the first week of this month.

ONGC may go for further process in its bid to merge MRPL once the Cabinet clears and finally approves its purchase of HPCL's 16.95 percent stake in MRPL.

Talking to Business Standard here on Thursday, Subir Raha, chairman and managing director of ONGC, said, "We are seriously considering the merger (with MRPL). We understand that if MRPL is merged with ONGC, it will give us good tax benefits which ultimately will turn into a significant net cash benefit for us."

Raha said a time frame has not been set for the merger. MRPL's accumulated losses, which was reported to be around Rs 730 crore (Rs 7.30 billion) by the end of December 31, 2001, will turn into a tax-shield for ONGC following the merger.

"We cannot give any commitment on the time-frame. We are considering all the pros and cons. We are also considering the benefits of keeping MRPL as a separate entity," said Raha.

But he mentioned that once Cabinet formally approves ONGC buyout of HPCL's stake in the MRPL, the process of possible merger may gain momentum.

The proposal to buy HPCL's 29.72 million shares which has been put before the Cabinet for final nod, which is expected to come through in the next one month. Once the Cabinet approves it, ONGC's stake in MRPL will go up to 88 per cent.

ONGC had last year acquired the Aditya Birla group's 37.40 per cent stake in MRPL for Rs 59.43 crore (Rs 594.3 million) at Rs 2 per share.


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