MRPL had its fuel taps running on Monday as union petroleum minister on Saturday said that ONGC will take a controlling 51% stake in the petrochemicals company.

As a result, the scrip of Mangalore Refinery & Petrochemicals jumped 4.64% to 7.90 by 10:25 IST. It notched up volumes of 16,502 shares on BSE till then.

The statement from Naik comes in vindication of the finance ministry's Public Investment Board's approval of an investment of Rs 660 crore (Rs 6.6 billion) by ONGC in the 9-million-tonne-a-year refiner. Under a restructuring proposal approved on 22 January, ONGC would pick up MRPL shares for Rs 60 crore from the Aditya Birla group and invest another Rs 600 crore (Rs 6 billion) as equity in the company.

With the Centre's approving the stake acquisition by ONGC, MRPL has been virtually rescued from the clutches of the Board for Industrial and Financial Restructuring. If not for ONGC, the company may have been referred to the BIFR.

Earlier, in December 2002, MRPL's board had, in fact, taken a decision to refer the company to BIFR as 50% of its peak net worth had been eroded in the past four years by accumulated losses. Hope that an infusion from acquirer ONGC was imminent dissipated when the Public Investment Board began an investigation into ONGC's acquisition of stake in the company.

The finance ministry, in fact, had pressed for the PIB route over the MRPL deal. According to the Department of Public Enterprises guidelines, framed on 22 July 1997, any investment by a public sector enterprise involving Rs 200 crore (Rs 2 billion) and above is required to go through the PIB route. However, the petroleum ministry opposed this move as ONGC's proposed investment of Rs 59.40 crore in the beleaguered MRPL was far less than the Rs 200 crore (Rs 2 billion) required for applicability of the PIB route.

Meanwhile, oil and gas analysts deem MRPL a `Dark Horse', implying that the company will come out with an excellent performance in months to come. They also believe the acquisition by ONGC will be mutually beneficial for both companies. With the management of MRPL in the hands of ONGC, the former's utilisation capacity is already running at 100%. It has also been reported that MRPL will start the export of two cargos of around 50-80 thousand tonnes of petrochemcials in a month.

The acquisition of MRPL will enable ONGC to set up retail outlets sanctioned to it under the marketing rights for transportation fuels. ONGC has been authorised to set up 600 petrol stations in four states.

Earlier, ONGC had informed the Lok Sabha that it would acquire the remaining stake of Hindustan Petroleum in Mangalore Refinery & Petrochemicals  after it takes over the refinery from the A V Birla group. After financial restructuring, which includes lenders converting part of their debt into equity, HPCL's stake in MRPL would come down to about 17% from the present 37.39%.

For the third quarter ended 31 December 2002, MRPL posted losses of Rs 130.3 crore (Rs 1.3 billion) compared to a loss of Rs 36.80 crore in the corresponding period of the previous year. Net sales increased by 89.8% to Rs 2,316.11 crore (Rs 23.16 billion) from Rs 1,220.50 crore (Rs 12.2 billion) in DQ 2001.