The merger of public sector banks in the country was a big step during the 9-year tenure of the Modi government. Now something similar is going to happen with government petroleum companies. Read this news...
The Modi government had done the work of merging 10 government banks in the country to form 4 big banks. Now such a big task can be seen in the form of merger of government petroleum companies. The Petroleum Ministry is working on the merger proposal of two government oil companies.
These companies are Mangaluru Refinery and Petrochemicals Limited (MRPL) and Hindustan Petroleum Corporation Limited (HPCL). Both these companies listed in the stock market are subsidiary companies of Oil and Natural Gas Corporation (ONGC). However, how will their merger be beneficial for the country? This is something to know.
Idea came 5 years back
A person aware of the matter told that the idea of merger of MRPL and HPCL came up 5 years back when ONGC acquired HPCL. Less work was done on this proposal of the government then, but now the government is taking it forward. This could be a share-swap deal.
According to sources, HPCL may issue new shares to the shareholders of MRPL under the merger. There will be no cash transaction in this. The Petroleum Ministry may soon take cabinet approval on this proposed merger.
ONGC's stake will increase in HPCL
ONGC and HPCL are the promoter companies in MRPL. ONGC has 71.63 percent stake in this and HPCL has 16.96 percent. While 11.42 percent is of public shareholding.
In such a situation, if this merger happens, then ONGC's stake in HPCL will increase, which is currently 54.9 percent. However, ONGC, HPCL, MPRL and the Ministry have not yet made any official comment about this.
Although this merger may take about 1 more year to complete. The reason for this is SEBI rules. According to this, there must be a gap of at least 2 years between two mergers of a company. MRPL has completed the merger of its subsidiary OMPL last year.
ONGC will benefit like this
The purpose of this merger plan is to bring different subsidiaries of ONGC Group under a single brand HPCL. This will also give the company some tax benefits. Hindustan Petroleum has a large retail network across the country. After this merger, the company will also get the assets of MRPL. MRPL has a large network in Karnataka.
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