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AV Birla group not to hike equity in MRPL

Hemangi Balse & Arijit De

The Aditya Birla group has ruled out further infusion of funds into Mangalore Refineries and Petrochemicals, its joint venture with the state-owned Hindustan Petroleum Corporation. The group's equity in MRPL is 37.5 per cent.

The government had suggested that the group should first raise its stake in MRPL to 51 per cent, and subsequently offload the entire holding to a strategic investor.

The relationship between the partners soured because of differences over the price at which the A V Birla group was to exit the company.

Sources at financial institutions said there was a stalemate in the discussions between the two partners. HPCL has not agreed to the "take-or-pay" clause for marketing the throughput from the refinery.

By increasing its stake, the A V Birla group could have acquired management control of MRPL. This, in turn, would have helped it to find a buyer for its equity. HPCL also holds a 37.5 per cent stake in MRPL.

Earlier, petroleum minister Ram Naik told Business Standard that HPCL had agreed to this arrangement.

A V Birla sources said: "Petroleum is a non-core area for us and the question of fresh infusion of funds does not arise."

We are looking for a strategic investor to offload our stake."

The A V Birla group wants to exit the joint venture for quite some time. While it asked for a price of Rs 14-17 a share, HPCL had offered Rs 1.60 a share. Subsequently, the group offered to buy out HPCL for double the amount, but HPCL declined.

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