Hind Petro To Raise Rs 590 Cr Through Warrant Conversion

Hindustan Petroleum Corporation Ltd (HPCL) will raise Rs 590 crore through warrant conversion without much dilution in equity. From Rs 208 crore, the equity will rise only eight per cent to Rs 226 crore assuming all warrants are fully converted by March 25 this year. The government's stake will drop from 55 per cent to 51 per cent. The conversion price is Rs 340 per share, the same as the issue price during HPCL's IPO in 1995.

At a press conference in Mumbai yesterday, HPCL chairman, H L Zutshi said "There will be no more dilutions, unless the government decides otherwise. Money for all expansions will be raised internally or through debt," Zutshi said.

 

He defended HPCL's decision to convert warrants at Rs 340, when the scrip has been ruling much below for most of the year. He said HPCL is a company with strong fundamentals and bright future. "The fact that our equity is not going to be diluted is enough to push up our earnings," he added.

Flanked by leading merchant bankers like Nimesh Kampani of JM Financial, Hemendra Kothari of DSP and Kishor Chaukar of I-Sec, Zutshi announced a Rs 11,500 crore expansion programme for the next five years.

The company is also entering the power sector by setting up power plants. Two plants are coming up, one with 800 MW near the upcoming Bhatin-da refinery in Pun-jab and the other in Visakhapatnam of 500 MW. Of this Rs 11,500 crore, investment in joint ventures will be Rs 2,138 crore, in power plants, Rs 3,700 crore, and exploration and production activities, Rs 3,000 crore.