HPCL, Mittal plan IPO for Bhatinda unit in Q4 2011

Steel tycoon Lakshmi N Mittal and Hindustan Petroleum Corp Ltd (HPCL) plan to sell a 10-per cent stake each in the under-construction Bhatinda Refinery in a public offering in Q4 of 2011 to raise Rs 1,000-1,500 crore.

State-owned HPCL and Singapore-based Mittal Energy Investment Pte Ltd, an L N Mittal Group firm, own 49 per cent each in HPCL-Mittal Energy Ltd (HMEL), which is building the Rs 18,919 crore refinery at Bhatinda in Punjab.

"We are planning to sell about 10 per cent of our stakes each through an initial public offering sometime in the fourth quarter of 2011 (calendar year)," a company official said.

The 9 million tonnes a year refinery will be mechanically complete by April 2011 and full commissioning will happen by September. "The IPO is being planned after that," he said.

The official said the two partners have so far contributed Rs 2,800 crore each out of their Rs 3,500 crore equity share.

"We have been advised to bring down the stake to 30 per cent (each). But in the first tranche only 10 per cent will be sold and a follow-on or further public offering (FPO) may happen later," he said.

The remaining 2 per cent in HMEL is with financial institutions.

The refinery is in its final phase of completion. Most of the 1,014-km cross-country pipeline which will carry imported crude oil from Mundra, in Gujarat, to the refinery, is also complete.

The Bhatinda Refinery is likely to start processing crude oil in April and all its units will be sequentially commissioned by the September/October 2011, he said.

It will be a zero bottoms, energy efficient, environment- friendly, high distillate yielding complex refinery that will be producing clean fuels and polypropylene by processing heavy, sour and acidic crudes.

Its configuration translates into one of the highest Nelson Indexes for the refinery amongst all the refineries in the country.

The Nelson Complexity Index indicates the value addition potential of a refinery.