MRPL to hike stake in ONGC Mangalore from 3% to 46%

Mangalore Refinery and Petrochemicals Ltd (MRPL), southern India's largest refiner, will acquire a majority stake in ONGC Mangalore Petrochemicals Ltd, the company said. The value of the deal was not disclosed.

The board of the company on Monday approved raising its stake from the current 3 per cent to 46 per cent by purchasing fully paid up equity shares from individual shareholders, MRPL said in a stock market filing.

The ONGC Mangalore plant, often called the aromatics complex, draws most of its feedstock from the adjacent MRPL refinery – both are controlled by the state-owned Oil & Natural Gas Corp.

The complex uses naphtha from MRPL to produce paraxylene and benzene, which are used in the manufacture of purified terephthalic acid (PTA), dimethyl terephthalate (DMT), as well as products such as styrene, polystyrene, phenol and nylon.

Purified terephthalic acid and dimethyl terephthalate are widely used to make polyester fibres and plastic bottles, besides dyes, resins and pesticides.

Other products from ONGC Mangalore include liquefied petroleum gas (LPG), fuel gas and hydrogen. Including naphtha, ONGC Mangalore uses 14 products from MRPL.

MRPL, which once showed higher gross refining margins (GRMs) than its peers such as Indian Oil Corp Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd, has been slipping of late. So far in the fiscal till September 2014, it posted a negative margin of $1.79, leading to a Rs987.57 crore net loss for the first six months of the fiscal.

The 442 acre ONGC Mangalore aromatics complex in the Mangalore Special Economic Zone was built at a cost of Rs5,750 crore. The plant started operations in October 2014.