22 C
New Delhi
Monday 9 December 2019
Economy ONGC buys govt's 51.11% stake in HPCL

ONGC buys govt’s 51.11% stake in HPCL

New Delhi: State-owned Oil and Natural Gas Corp (ONGC) on Saturday announced acquisition of government’s entire 51.11% stake in oil refiner HPCL for Rs 36,915 crore, paying a premium of over 10%.

ONGC will pay Rs 473.97 per share for 77.8 crore shares of the government in Hindustan Petroleum Corp Ltd (HPCL), the company said in a stock exchange filing. The price it is paying is 14% higher than Friday’s closing price of HPCL and over 10% of the 60 -day weighted average of the scrip.

The transaction, which will help the government cross its annual sell-off (disinvestment) target for the first time ever, has been executed through an off-market deal.

Also, the company has cash reserves of about Rs 12,000 crore. Sources said ONGC has already taken board approval for raising borrowing limit to Rs 35,000 crore from the previous approval of Rs 25,000 crore.

Based on Friday’s closing price of Rs 416.55, HPCL has a market capitalisation of about Rs 63,475 crore. At this price, the government’s 51.11% stake is worth Rs 32,442 crore.

“Government of India has entered into an agreement with ONGC today for strategic sale of its 51.11% equity share-holding in HPCL at a consideration of Rs 36,915 crore,” the finance ministry tweeted.

The Union Cabinet, in its meeting held on 19 July last year, gave ‘in-principle’ approval to the said proposal and decided to set up an alternative mechanism under the finance minister to decide on the price, timing and the terms and conditions of the strategic sale.

Through this acquisition, ONGC will become India’s first vertically integrated ‘oil major’ company, having presence across the entire value chain. The integrated entity will have advantage of having enhanced capacity to bear higher risks and take higher investment decisions etc.

In this process, ONGC has acquired significant mid-stream and downstream capacity and will attain economies of scale at various levels of operations.

With a turnover of Rs 2,13,489 crore and profit of Rs 6,502 crore during 2016-17, HPCL ranks at 384th position in Fortune Global 500 and 48th place in Platts 250 Global Energy Companies.

HPCL markets around 35.2 million tonnes of petroleum products with a market share of about 21% and is number one lube marketer in the country. It has refineries at Mumbai and Visakhapatnam and a joint venture refinery at Bhatinda.

It owns the biggest Lube refinery in India and the second largest cross country product pipeline network of about 3,500 km. HPCL has a vast marketing network spread across the length and breadth of the country with terminals, depots, LPG bottling plants, Lube blending plants, aviation fuel stations and around 15,000 petrol pumps.

“ONGC Board on January 19 2018 considered the proposal and approved acquisition of the entire 51.11% shareholding (778,845,375 equity shares) of the President of India, at a cash purchase consideration of INR 473.97 per share with a total acquisition cost of Rs 36,915 crore,” the company said.

ONGC is the largest producer of crude oil and natural gas in India, contributing around 70 per cent of domestic production.

PTI

Subscribe to our newsletter

You will get all our latest news and articles via email when you subscribe

The email despatches will be non-commercial in nature
Disputes, if any, subject to jurisdiction in New Delhi

Opinion

प्याज़ के आँसू न रोएँ — महंगाई से किसान, उपभोक्ता दोनों को फ़ायदा

जिस अल्प मुद्रास्फीति की वजह से वे सरकार से बहुत खुश थे, उसी 1.38 प्रतिशत की खाद्यान्न मुद्रास्फीति के कारण किसानों को अपने पैदावार के लिए समुचित मूल्य नहीं मिल रहे थे

CAB Can Correct Wrongs Of NRC

… if the government can fix the inept bureaucracy and explain what happens to those marked as aliens, as the neighbours are not taking them back

Fire: Uphaar To Mandi, Delhi Remains Incorrigible

After every fire tragedy, it is learnt illegal factories were operating in residential areas also with illegally built hotels, theatres, etc

Taliban-US Talks Bode Ill For India, But Can’t Be Helped

On the one hand, infrastructure projects of India worth crores are at stake; on the other, Pakistan is vying for the day a Taliban-ruled Afghanistan can serve it again as a terror launchpad

India Not Ready For End To Death Penalty

India hardly has an efficient apparatus of governance, but if this is what we have, we must live with the death of a killer by a court order
- Advertisement -

Elsewhere

Sadhvi Prachi: Nehru ‘biggest rapist’ & 10 previous affronts

Other than the Nehru dynasty, the favourite targets of Sadhvi Prachi are Indian Muslims in general and the Khans of Bollywood in particular

Fire: Uphaar To Mandi, Delhi Remains Incorrigible

After every fire tragedy, it is learnt illegal factories were operating in residential areas also with illegally built hotels, theatres, etc

Unnao family offered compensation; UP Police still callous

While the family of the gang-rape and murder victim of Unnao was offered two houses, gun licence and a job, cops in the village turned away a victim of attempted rape

Factory owner Md Rehan arrested; 29 of 43 bodies identified

The construction units in the factory area did not have a no-objection certificate (NOC) of the fire department

Taliban-US Talks Bode Ill For India, But Can’t Be Helped

On the one hand, infrastructure projects of India worth crores are at stake; on the other, Pakistan is vying for the day a Taliban-ruled Afghanistan can serve it again as a terror launchpad

You might also likeRELATED
Recommended to you

For fearless journalism

%d bloggers like this: