Mumbai: Mangalore Refinery and Petrochemicals Ltd (MRPL) may sell shares to comply with rules that mandate listed companies to have at least 25% of their equity with the public, two officials familiar with the development said.
Currently, only 11.42% of MRPL’s shares are with the public. The rest 88.58% is owned by state-run Oil and Natural Gas Corp. Ltd (71.63%) (ONGC) and Hindustan Petroleum Corp. Ltd (16.96%) (HPCL).
In October 2014, Securities and Exchange Board of India (Sebi) had notified rules for minimum public shareholding in listed state-owned firms wherein listed public sector firms need to raise their public shareholding to a minimum 25% by August 2017. The objective was to help widen investor base in these companies and boost government’s fund raising plans through disinvestment programmes.
“Today, the option for MRPL is to float fresh equity through a public offer if the existing shareholders do not divest a part of their shareholding in MRPL to meet the Sebi norms,” said the first of the two people cited above.
He spoke on condition of anonymity as he is not authorized to talk to reporters.
The official added ONGC and HPCL have not come to a decision on who among them would sell shares. “Just because ONGC holds a larger stake does not mean ONGC should offload a larger part of it. HPCL should participate equally if equity dilution is considered,” he added.
ONGC and HPCL did not reply to an email sent Monday.
In September 2016, one of the board members of HPCL had told Mint that given ONGC is a majority shareholder in MRPL, ONGC should offload stake for MRPL to meet the listing norm.
“The companies will discuss the matter and decide on the same in the next two months given that we have to meet the norms by August. If we decide on issuance of fresh equity, the offer size will be large of course. The details need to be worked out,” added the first official cited above.
MRPL shares on Wednesday ended at Rs103.15, down 1.72% from their previous close, while the Sensex fell 0.34% to 28,901.94 points.