ONGC acquires 51.11% stake in HPCL

The objective of acquisition is aimed to give CPSEs capacity to bear higher risks, avail economies of scale, take higher investment decisions

GN Bureau | January 22, 2018


#ONGC   #HPCL   #PSU  

In its bid to create an oil major to match the performance of global and domestic oil and gas players, Oil and Natural Gas Corporation Ltd (ONGC) board has approved the acquisition of entire 51.11 percent shareholding of the government in Hindustan
Petroleum Corporation Ltd (HPCL) with a total acquisition cost of Rs 36,915 crore on January 19.

ONGC has entered into a share purchase agreement with the government for acquiring the 778,845,375 equity shares of HPCL on January 20, 2018. The PSUs expect to complete the transaction before end of January 2018.

The SEBI has granted an exemption from the application of Regulation 23 of the Listing Obligations and Disclosure Requirements Regulation 2015 (LODR) to the ONGC for the transaction. Requisite approval from the shareholders of ONGC for the related party transaction will be sought by ONGC after the execution of the share purchase agreement.

The acquisition is aimed to achieve the government’s objective to combine the various CPSEs to give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders and create an oil major which will be able to match the performance of international and domestic private sector oil and gas companies.

ONGC expects, as an integrated oil company, its performance will be less affected by the volatility of crude prices due to diversification of its cash flows to midstream and downstream presence through HPCL, lower earnings volatility, diversified cash flows and lower business risk resulting in better valuation and higher shareholder value.

HPCL and ONGC have a complimentary asset portfolio and through this acquisition, the latter is gaining a midstream and downstream presence and access to a marketing network. ONGC will also gain access to marketing network of HPCL which could be synergistically utilised for projects such as MRPL, OPaL.

Comments

 

Other News

On a personal note: DIVINE

An underground rapper who grew up on Mumbai streets, Divine spins his music around his environment and poverty. His breakout single, ‘Meri Gully Mein’, along with fellow rapper Naezy caught Bollywood’s attention. The Hindi film ‘Gully Boy’ is inspired by their lives and gr

The role model for an IAS officer

Anil Swarup, an IAS officer of Uttar Pradesh cadre who retired in 2018, is a model bureaucrat who retained his optimism right till the end of service and exemplified dedication and commitment. His excitement at the opportunities that a job in the IAS provided is evident on every page of his new book publis

Reform of the civil services: At home and away

The question of reform of the civil services has been debated extensively at all levels at least over the last five to six decades after independence. Indeed, it was soon perceived that the Indian Administrative Service (IAS) may not be well equipped to deal with the problems of an emerging developing coun

The greatest challenge for any government

Shouting vengeance at all and sundry while wriggling out of holes of our own making seems to be our very special national characteristic. Some recent instances are illustrative of this attribute. A number of business tycoons with thousands of crores of unresolved debts have fled abroad with the government

The mysterious case of CBI’s legality

The Central Bureau of Investigation (CBI) came into existence, based on a Resolution of the home ministry, dated April 1, 1963 – a sheer coincidence that it also happens to be April Fool’s day. Over the past few months, we have seen the CBI live up to its founding day with great zeal, being i

The Evolution of Modi

Gujarat was passing through a turbulent phase in the 1980s. The decade began middle class agitations against new reservation policies, and the caste friction turned communal under the watch of chief minister Madhavsinh Solanki, alienating majority of urban population on both counts. The ground was ripe for

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter