MRPL board approves acquisition of ONGC stake in OMPL
Shares of Mangalore Refinery & Petrochemicals (MRPL), rallied more than 2% to Rs 26.65 apiece on NSE after the company’s board approved acquisition of OMPL’s shares from ONGC.
MRPL board, in its 232nd meeting held on October 19, 2020, approved acquisition of 1,24,66,53,746 equity shares of Rs 10 each of ONGC Mangalore Petrochemicals (OMPL), a subsidiary of MRPL, from Oil and Natural Gas Corporation (ONGC).
MRPL was holding 51% of the paid up equity of OMPL, which has been increased to 99.99% pursuant to the acquisition of equity shares from ONGC.
The merger of MRPL-OMPL was needed for OMPL and MRPL in terms of revenue growth, as an integrated refinery operations will yield better benefits.
Interestingly, this merger will facilitate ONGCs’ strategy of vertical integration. After accomplishing the first step of OMPL-MRPL merger, the next step is to merge MRPL with HPCL. ONGC may be slightly short of meeting Rs 35,000 crore capital expenditure target for FY21. This is also due to difficulties in movement of essential equipment from overseas following restrictions on movement during the pandemic.
Oil demand is likely to be 10 million barrel per day less in 2020, which the company expects to pick up again with containment of COVID-19. However, oil prices will remain an important determinant for the sector’s growth and investment prospects.
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