Financial Daily from THE HINDU group of publications
Monday, Nov 11, 2002
Corporate - Mergers & Acquisitions
MRPL may have to wait a while for ONGC funding
MUMBAI, Nov. 10
BUREAUCRACY has caught up with Oil and Natural Gas Corporation Ltd's promised Rs 600-crore investment in Mangalore Refinery and Petrochemicals Ltd.
The Ministry of Finance has turned down a proposal by the Ministry of Petroleum and Natural Gas to permit the capital infusion without going through the Public Investment Board (PIB) to avoid delays.
PSU investments, especially by navratna companies, of above Rs 200 crore have to be ratified by the PIB. But approaching the PIB will mean losing time as board procedures usually take a few weeks, according to senior ONGC officials.
It was important that the investment came through for MRPL's financial restructuring, officials said.
According to banking sources, if the investment gets inordinately delayed, some of MRPL's Rs 5,500-crore debt may have to be classified as non-performing assets in lenders' books.
"At least one bank of the 22 lenders to MRPL has already had to classify its loans to MRPL as NPA," the source said. ICICI is the lead lender to the company, followed by IDBI and State Bank of India, which have exposures of around Rs 1,000 crore each.
The Petroleum Ministry contends that Hindustan Petroleum had got PIB approval when it set up MRPL with the AV Birla group. So, any investment by ONGC, which purchased the AV Birla group's 37 per cent stake in the joint venture at Rs 2 per share, should not require another PIB clearance.
MRPL management hopes that the money would come in quickly so that it can go ahead with the financial revamp. The company has planned a preferential allotment of Rs 2,000 crore to its lenders apart from the ONGC investment.
"Once the capital infusion and debt conversion are completed, MRPL's debt-equity ratio will come down to 2.5:1," said Mr Ravi Kastia, Managing Director.
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