LN Mittal to buy 49% stake in HPCL’s Bathinda refinery for Rs. 3300 crores

Indian-born British steel magnate LN Mittal will pick up a 49% stake in the Rs. 16,700 crore-greenfield refinery project at Bathinda in Punjab with an investment of around Rs. 3300 crores. The refinery is being set up by Hindustan Petroleum Corporation Limited (HPCL). This is the first foreign direct investment in the refinery sector. HPCL will sign a JV with Luxembourg-based Mittal Investments for the 9 mmtpa Guru Gobind Singh Refinery project and allied facilities at Bathinda. Mittal Investments is wholly owned by the Mittal family and is registered in Luxembourg. It holds 38% in Mittal Steel Company.

Earlier, on two occasions, HPCL failed to forge alliances with British Petroleum of the UK and Saudi Aramco of Saudi Arabia. HPCL and Mittal Investments will hold 49% equity each in the project, while the balance 2% will be held by financial institutions. It is expected that a formal agreement between the two partners will be signed during the proposed visit of Mr. Mittal on March 2. Public sector Oil India (OIL) may also join the project at a later date and may get a 10-15% stake in the project out of HPCL’s 49%. The HPCL board had cleared the JV proposal on Monday. The project is expected to be commissioned by 2010.

Read The Economic Times article.

BHEL, HPCL, Engineers India in race to buy sick PSU Bharat Heavy Plate and Vessels

Underperforming public sector EPC firm Bharat Heavy Plate and Vessels Limited (BHPV) has been put up for sale by its parent company, the state-owned Bharat Yantra Nigam Limited (BYNL). Bharat Heavy Electricals Limited (BHEL), Engineers India Limited (EIL) and Hindustan Petroleum Corporation Limited (HPCL) are in the race to acquire it, with BHEL I the lead. SBI Caps has already conducted the due diligence.

BHPV requires an infusion of Rs. 1000 crores for its revival package. As per the estimates made by EIL and BHEL, investments of Rs. 300 crores would be required for replacing the existing machinery which is around 30 years old. Both companies propose additional machines for new product lines having market potential in oil and gas and power industries. Besides investment in equipment, there will be requirement of over Rs. 100 crores for the working capital needs. BHPV also seeks financial restructuring to clean its balance sheet with waiver of loans and other statutory liabilities that have accrued till date.

The firm is expected to close the current fiscal with a turnover of Rs. 175 crores; its order book position is worth over Rs. 400 crores. The company also has excess land measuring 377.7 acres, which may be disposed of to secure additional funds.

The Ministry of Heavy Industries and Public Enterprise has invited EIL, BHEL and HPCL seeking an Expression of Interest (EoI) for acquiring BHPV. It has been proposed that EIL will provide engineering, inspection, marketing and managerial support. HPCL has been considered for partnering this venture for managerial support and securing orders for the ongoing projects of BHPV. However, BHEL with experience in handling labour, running industrial enterprise, capability to provide technology, besides securing orders from the power industry was considered as an ideal partner in the venture.

Read The Economic Times article.

HPCL to sell 50% stake in Vizag refinery to French oil firm Total

Hindustan Petroleum Corporation Limited (HPCL) is selling 50% stake in its Vizag refinery to French oil major Total SA. Total may pick up the stake in collaboration with Kuwait Petroleum for a consideration of Rs. 6000 crores.

HPCL is setting up a 9 mn tonne export-oriented refinery adjacent to the existing refinery at Vizag at an estimated investment of Rs. 12,000 crores. The refinery would be completed in 2011. HPCL is also planning a 1 mmtpa petrochemical chemicals plant at the refinery site.

The company may also look to raise funds through an initial public offering of the Vizag refinery. In a related development, the Lakshmi Mittal Group has reportedly shown interest for a 49% stake in HPCL’s 9 mmtpa Bhatinda refinery in Punjab.

Read the article in Business Standard.