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ONGC to raise its first ever debt of Rs 25,000 cr to fund HPCL buy

India's largest oil and gas producer has about Rs 13,000 crore in cash

Press Trust of India  |  New Delhi 

ONGC
A technician is pictured inside a desalter plant of Oil and Natural Gas Corp (ONGC) on the outskirts of Ahmedabad (Photo: Reuters)

rich and Natural Gas Corp (ONGC) will raise its first debt ever, of Rs 25,000 crore, to part fund the Rs 37,000 crore of government's stake in Hindustan Petroleum Corp Ltd (HPCL).

India's largest and gas producer has about Rs 13,000 crore in and would need to borrow the rest to fund the buying of government's 51.11 per cent stake in


has sought shareholder approval for "borrowing/ raising funds in Indian rupee and/ or foreign currency by issue of debt instruments (including bonds, non-convertible debentures and notes) in domestic and/ or overseas market" of Rs 25,000 crore.

The borrowings would be for "of projects/ equity and/or going concerns, meeting capital expenditure, working capital requirements and general corporate purposes during the period commencing from the date of passing of Special Resolution till completion of twelve months thereof or the date of the next annual general meeting in the financial year 2018-19, whichever is earlier," the company said in a shareholder resolution.

The resolution would come up for voting at the company's annual general meeting (AGM) of shareholders on September 27.

The board of last month gave 'in principle approval' for the of the stake in HPCL, which at today trading price of Rs 477.65 is worth about Rs 37,000 crore.

holds 13.77 per cent stake in IOC, which at today's trading price is worth Rs 28,800 crore. It also holds 4.83 per cent stake in gas utility Ltd, which is worth Rs 1,550 crore.

But the company is not likely to sell any of it to fund the buy, officials said.

A six-member Committee of Directors has been constituted to examine various aspects of the and to provide its recommendations to the board.

The panel includes Chairman and Managing Director Dinesh K Sarraf and Director (Finance) A K Srinivasan as also independent directors K M Padmanabhan, Sumit Bose and Vivek Mallya.

Director (Technology & Field Services) Shashi Shanker, who has been selected to succeed Sarraf as the chairman of at the end of September, will also be part of the panel.

The official said the will be done as per the Sebi takeover code. The price most likely will be 6-month average of scrip on the day of the decision.

The last month had approved sale of its 51.11 per cent stake in refiner to India's largest producer

Prior to the merger, is likely to take over Mangalore Refinery and Petrochemicals Ltd (MRPL) to bring all the refining assets of under one unit. currently owns 71.63 per cent of MRPL while has 16.96 per cent stake in it.

The official said will not have to make an open offer to minority shareholders of as the government's holding is being transferred to another state-run firm and the ownership is not changing.

The deal will be completed within a year, he said. will become a subsidiary of and will remain a listed company post the acquisition, the source said, adding that the board of the refining and marketing company will continue to remain separate.

The has also constituted a committee -- headed by Finance Minister Arun Jaitley and comprising minister Dharmendra Pradhan and road minister Nitin Gadkari to work out the modalities of the sale.

Jaitley had, in his Budget for 2017-18, talked about creating an integrated behemoth. After that were asked to give their options.

had evaluated options of acquiring either or BPCL -- the two downstream refining and fuel marketing

It found the nation's second-biggest fuel retailer BPCL too expensive and conveyed its choice to the parent ministry.

Sources said the transaction is likely to be completed within the current financial year, ending March 31, 2018.

will add 23.8 million tonnes of annual refining capacity to ONGC's portfolio, making it the third-largest refiner in the country after IOC and Reliance Industries.

First Published: Mon, September 04 2017. 15:41 IST
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