The Aditya V Birla group is learnt to have decided to turn down the price being offered by Hindustan Petroleum Corporation Ltd (HPCL) for the 37.5 per cent equity held by the former in the joint sector Mangalore Refineries and Petrochemicals Ltd (MRPL).
The AVB group is expected to convey its decision to the petroleum ministry "within a week" and seek a no-objection certificate from the government to unload its equity to another buyer, industry sources said.
HPCL is understood to have worked out the price based on 50 per cent of the book value of MRPL shares adjusted to contingent liabilities. This price comes to much less than even the marker price of the scrip, which is ruling around Rs 7-8, the sources said.
HPCL is also learnt to have conveyed to the AVB group that it cannot pay a higher price for the equity since it would like to factor in around Rs 4,000 crore investment that will have to be made in the loss-making refinery to turn it around.
Moreover, according to the sources, HPCL will find it hard to raise additional resources for the AVB group's equity since it has already made investment commitments for some other projects. The biggest of these projects is the nine million tonne per annum Punjab refinery at Bhatinda.
Earlier, SBI Caps and Arthur Andersen, the independent valuers jointly appointed by HPCL and the Aditya Birla group, had fixed the value in the range of Rs 14-17 per share. HPCL had objected to the valuation which had questioned several assumptions made by the consultants.
The matter was then taken up with Union petroleum minister Ram Naik who asked HPCL to come up with its "final" offer within 10 days of his meeting the two sides and told the ABV groups to convey him its decision on the offer within a week of the offer being made to it.
The rift between the two promoters over the sale of the shares had also stalled MRPL's debt restructuring programme. Financial institutions are understood to have decided to approve the plan outlay only after the stake sale issue is resolved.