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ONGC board gives in-principle nod for restructuring options of group firms

ONGC is looking at trimming down the structure by merging some of the subsidiaries

Press Trust of India  |  New Delhi 

ONGC
ONGC

The board of state-owned Oil and (ONGC) has given in-principle approval for exploring options for a restructuring of the group firms including the merger of subsidiaries and HPCL.

The India's largest producer, has several subsidiaries and joint ventures including two in refining sector - Corp Ltd and and two petrochemical units - Petro additions Ltd (OPaL) and Mangalore Petrochemicals Ltd. It also has an overseas investment arm in ONGC Videsh Ltd.

"The board of directors of ONGC, at the 308th meeting held on June 29, accorded its in-principle approval for exploring options for the restructuring of ONGC group companies," the company said in a regulatory filing.

While ONGC did not provide details of the proposed restructuring, sources in the company said an would be appointed to suggest possible options.

The board of the company will take a call on the options suggested by the

ONGC is looking at trimming down the structure by merging some of the subsidiaries.

While operates a 15 million tonnes a year refinery at Mangalore in Karnataka, HPCL has two refineries at and OPaL has built at Rs 320 billion petrochemical complex at Dahej in Gujarat, while Power Co Ltd (OTPC) operates a 726 MW power plant at Palatana in
 

It also has two SEZ - and Also, it has a pipeline company in and a stake in helicopter service operator, as well as Petronet LNG Ltd.

Sources said while there is certainly a case for merger of with HPCL for not just business synergies but also help avoid penalties from market regulator SEBI for not meeting public float requirement in case of the former.

Also, some other units too can be combined.

In the regulatory filing, ONGC referred to the acquisition of government's stake in HPCL earlier this year as part of government's proposal to create a public sector 'oil major' which will be able to match the performance of international and domestic private sector

ONGC has in past spoken of benefits of bringing all refining business under one company. HPCL management too has supported taking over MRPL to create India's second-biggest firm.
 

"The restructuring proposal shall safeguard the overall interest of the public shareholders of all ONGC group companies," ONGC said.

The restructuring, it said, would be done taking into account the need for better value creation and synergy among group firms. Also, it would be done to meet the minimum public shareholding requirement in case of MRPL.

SEBI's listing rules require a minimum public float of 25 per cent. In case of MRPL, the float is less than 11.5 per cent.

"The implementation of any such restructuring proposal shall be subject to the approval of the Government of India, the board of directors of the relevant and other stakeholders of such companies in terms of applicable laws," ONGC said.

First Published: Mon, July 02 2018. 18:51 IST
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