HPCL offers 37% less than MRPL market price

hindustan petroleum will offer a price equivalent of 50 per cent of the book value of mrpl to buy out the av birla group's 37.5 per cent stake in the company. the hpcl board, after having deliberated on the matter, is expected to communicate its decision to the birlas in the coming days, sources said. the hpcl board, after having deliberated on the matter, is expected to communicate its decision to the birla group in the coming days, sources said. hpcl officials have declined to comment on the outcome of the board meeting. given the equity base of rs 792 crore, consisting of 79.2 crore shares with a face value of rs 10, a price equal to 50 per cent of the book value works out to around rs 5 per share. the mrpl scrip closed at rs 7.92 on the bombay stock exchange on thursday. birla group sources said that the group will not accept the price offered by hpcl, which is around rs 5-6 per share. the decision by the hpcl board has been communicated to the ministry, which is expected to give its view shortly, sources said. if the av birla group does not accept hpcl's price then the already prolonged dispute over the sale of the av birla group's stake in mrpl is likely to continue. hpcl has been negotiating with the a v birla group for acquiring its 37.5 per cent equity stake in mrpl, in which both are equal partners. a report by sbi caps and arthur andersen had earlier pegged the value of the a v birla group's shares at rs 14-17 per share. sources said that petroleum ministry intervened in the matter after the aditya birla group indicated that hpcl is not seriously considering the issue. the ministry is likely to have a say on the final price. the dispute over the price to be paid by hpcl for the a v birla group's stake in mrpl was expected to be resolved by end-november. commenting on the issue, union petroluem minister ram naik said it is in the best interest of the mrpl that kuwait petroleum could be roped in as a partner. although kuwait petroleum has evinced interest in the project for the past two years, it is yet to made a concrete proposal. kuwait petroleum is understood to have had preliminary meetings with both promoters after the recent valuation exercise. sbi caps and arthur andersen, both independent valuers, have employed three tools such as market price, discounted cash flow method and net asset value method to arrive at the final price band. the report considers nine business scenarios, based on varying product prices. it also projects cash flows for the next 10 years. mrpl's 9-million-tonne-per-year refinery at mangalore in karnataka has been operating at lower throughput due to limited funds and slow demand. the company has, meanwhile, commenced financial restructuring as it has a large debt of rs 6,000 crore. the company pruned its losses to rs 38 crore in the recent quarter ended september 30, down from rs 64 crore in the previous corresponding period. senior executives of mrpl today are said to have met icici officials to discuss the financial restructuring.

HPCL offers 37% less than MRPL market price

HINDUSTAN Petroleum will offer a price equivalent of 50 per cent of the book value of MRPL to buy out the AV Birla group’s 37.5 per cent stake in the company.

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