Lazard To Iron Out Mrpl Financials

Mangalore Refinery & Petrochemicals (MRPL), the joint sector refining company promoted by the Aditya Birla group and Hindustan Petroleum Corporation (HPCL), has appointed Lazard India to find a solution to its financial woes.

Lazard's job would be to chalk out an optimum debt-equity structure for the company and restructure its high cost debt portfolio, among other things.

The company has informed the Bombay Stock Exchange (BSE) that it wishes to undertake restructuring of its existing debt/capital in order to prevent a situation of financial distress and to improve the overall capital structure to a manageable level.

MRPL's paid-up share capital as on March 31, 2000, was Rs 729.14 crore, against an authorised capital of Rs 2,000 crore, while it has an outstanding debt of Rs 5,408.29 crore, skewing its debt-equity ratio to an unwieldy 4.27:1.

The company has around Rs 4,957 crore of secured loans, of which Rs 916 crore comprises foreign currency loans from international banks and Rs 2,114 crore of rupee-denominated loans from domestic banks and financial institutions.

During fiscal 1999-2000, MRPL interest charges were a high Rs 236.96 crore, though lower than the previous fiscal's Rs 343.70 crore. The company, over the last few months, has been grappling with the problem of ownership as the Aditya V Birla group has announced its desire to exit.

While HPCL is still in two minds on picking up the stake, the country's largest oil refinery company, Indian Oil Corporation (IOC), too has not taken any decision on the issue.

The joint venture till last year was in negotiations with Kuwait Petroleum and Totalfina Elf to offload a strategic stake, and had even been on the verge of inking a deal with Kuwait Petroleum. However, the deal fell through in the final stages.

Both the Birlas and HPCL have a 37 per cent stake each in the nine million tonne refining company, while the balance holding is with the financial institutions (FIs) and the public.

The company's financial problems have been compounded by a bad capital market over the last three years due to which it was unable to tap the domestic capital markets or the GDR market for funds.