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Megabucks in their eyes: The Pioneer
New Delhi, Sept 19: The Petroleum Ministry is contemplating merging retailing company Hindustan Petroleum Corporation Limited (HPCL) with upstream major Oil and Natural Gas Corporation (ONGC) in a bid to create an end-to-end, integrated mega oil corporation with a combined annual net profit of over Rs 12,000 crore.
New Delhi, Sept 19: The Petroleum Ministry is contemplating merging retailing company Hindustan Petroleum Corporation Limited (HPCL) with upstream major Oil and Natural Gas Corporation (ONGC) in a bid to create an end-to-end, integrated mega oil corporation with a combined annual net profit of over Rs 12,000 crore.
The merged mega corporation is expected to consolidate market-share, increase profitability and efficiency with economies to scale. And all this can happen without any change in ownership.
The mega-merger proposal is expected to get a boost after the Supreme Court's verdict, directing the government to seek parliamentary approval before divesting HPCL. The merger proposal was mooted earlier in February 2002 - takeover of Hindustan Petroleum by ONGC on a nomination basis - but was turned down by the Cabinet Committee on Disinvestment.
The merged mega corporation is expected to consolidate market-share, increase profitability and efficiency with economies to scale. And all this can happen without any change in ownership.
The mega-merger proposal is expected to get a boost after the Supreme Court's verdict, directing the government to seek parliamentary approval before divesting HPCL. The merger proposal was mooted earlier in February 2002 - takeover of Hindustan Petroleum by ONGC on a nomination basis - but was turned down by the Cabinet Committee on Disinvestment.
The biggest beneficiary of the merger, if it goes ahead, would be ONGC, expanding its portfolio from exploration to refining to a direct marketing company. According to ministry sources, the total net worth of the new entity, as per the last audited report, would be over Rs 43,000 crore with a projected combined net profit of over Rs 12,000 crore.
ONGC would get two readymade refineries, one in Mumbai and the other in Visakh, and the one coming up in Punjab, land for which has already been acquired. On the Punjab refinery, sources said negotiations regarding guarantee for tax concession with the State Government are on and the company is hopeful of clinching the deal. The cost of setting up the refinery would be close to Rs 9,000 crore and another over Rs 2,000 crore would be required for setting up the pipeline. The 5,000 retail outlets HPCL owns would also come in handy for the merged entity. ONGC has already been given the go-ahead to set up 11,000 retail outlets but the problem "lies in setting them up in prime places. If we get readymade outlets and that too in prime locations across the country, it would be a good deal," sources said. Moreover, "the crude inputs can be transported directly to the integrated company and later pushed for retail sales, rather than selling out to companies like MRPL. This would further jack up the Corporation's profitability." HPCL, in turn won't have to purchase crude from an outside source.
The mega-merger proposal is expected to get a boost after the Supreme Court's verdict, directing the government to seek parliamentary approval before divesting HPCL. The merger proposal was mooted earlier in February 2002 - takeover of Hindustan Petroleum by ONGC on a nomination basis - but was turned down by the Cabinet Committee on Disinvestment.
The merged mega corporation is expected to consolidate market-share, increase profitability and efficiency with economies to scale. And all this can happen without any change in ownership.
The mega-merger proposal is expected to get a boost after the Supreme Court's verdict, directing the government to seek parliamentary approval before divesting HPCL. The merger proposal was mooted earlier in February 2002 - takeover of Hindustan Petroleum by ONGC on a nomination basis - but was turned down by the Cabinet Committee on Disinvestment.
The biggest beneficiary of the merger, if it goes ahead, would be ONGC, expanding its portfolio from exploration to refining to a direct marketing company. According to ministry sources, the total net worth of the new entity, as per the last audited report, would be over Rs 43,000 crore with a projected combined net profit of over Rs 12,000 crore.
ONGC would get two readymade refineries, one in Mumbai and the other in Visakh, and the one coming up in Punjab, land for which has already been acquired. On the Punjab refinery, sources said negotiations regarding guarantee for tax concession with the State Government are on and the company is hopeful of clinching the deal. The cost of setting up the refinery would be close to Rs 9,000 crore and another over Rs 2,000 crore would be required for setting up the pipeline. The 5,000 retail outlets HPCL owns would also come in handy for the merged entity. ONGC has already been given the go-ahead to set up 11,000 retail outlets but the problem "lies in setting them up in prime places. If we get readymade outlets and that too in prime locations across the country, it would be a good deal," sources said. Moreover, "the crude inputs can be transported directly to the integrated company and later pushed for retail sales, rather than selling out to companies like MRPL. This would further jack up the Corporation's profitability." HPCL, in turn won't have to purchase crude from an outside source.