Mittal seeks FIPB nod for Bhatinda unit

NEW DELHI: Mittal Investments has applied to the foreign investment promotion board (FIPB) for regulatory approval of its mega refining JV with HPCL. Mittal Investments, the private investment arm of the LN Mittal group, is picking 49% stake in Guru Gobind Singh Refineries (GGSRL), a wholly-owned subsidiary of public sector oil company HPCL with an investment of Rs 3,506 crore.

The JV will be engaged in completing a refinery project located at Bhatinda in Punjab. The project, already under implementation, is scheduled for completion in September 2010.

As a part of the deal, Mittal Investments will pick up 49% stake in GGSRL through its wholly-owned subsidiary based in Singapore called Mittal Energy Investments. HPCL will have 49% and the balance 2% will be held by financial institutions (FIs).

Both HPCL and Mittal Investments will make an equity contribution of Rs 3,506 crore each and Rs 143 crore is to be brought in by FIs. The foreign direct investment (FDI) by Mittal Investments will be brought in tranches by way of issue of equity shares.

As of March 2007, GGSRL had an issued share capital of Rs 338.94 crore. At present, the company’s authorised share capital stands at Rs 6,000 crore. Post FDI infusion, GGSRL will have an authorised share capital of about Rs 7,100-7,200 crore.

GGSRL is developing a refinery with a capacity of 9MT per annum at Bhatinda. A 1,011 km cross-country oil pipeline from Mundra in Gujarat to Bhatinda will also be built. SBI Capital Markets, the financial advisors of GGSRL, has estimated the ‘as-built’ cost of the project at Rs 18,919 crore at the prices prevailing in January 2007. GGSRL has already incurred expenditure worth around Rs 338.94 crore on the project.