HPCL's marketing network can not only be used to market MRPL products but also that of ONGC Petro additions Limited (OPaL), said Shashi Shanker, CMD, ONGC.
Over the weekend, ONGC announced that it will pay Rs 36,915 crore for a 51.11 percent stake in HPCL. ONGC will pay Rs 473.97 per share and will complete the acquisition of government's stake in HPCL by January end.
Throwing more light on the deal and funding for the HPCL acquisition, Shashi Shanker, CMD, ONGC said part of the funding will be done through internal accruals. He said they also have approval from the board for short-term borrowing, as well as stocks of IOC and GAIL.
He said they have tied-up for borrowing with different banks of around Rs 50000 crore (short-term) including Indian rupee loan and foreign currency loan, have stocks of around Rs 25000-30000 crore. Therefore, there are various options open for funding and the best option will be exercised for along with internal accruals, said Shanker.
Most importantly, while borrowing funds we have kept pre-payment options without any penalty and so at any period of time we can repay that loan, said Shanker.
Talking about synergies, he said HPCL has got a well-established network and has close to 15000 retail outlets. Last financial year they marketed about more than 35000 tonnes of refined products, which is much more than their refining capacity.
With regards to MRPL, he said it is a standalone refinery but don’t have marketing network. But both are a very good fit for us.
Shanker said, HPCL's marketing network can not only be used to market MRPL products but also that of ONGC Petro additions Limited (OPaL).
Moreover, both HPCL and MRPL source crude oil and so we can get better price for crude oil, he said.The big fluctuation in crude prices could impact ONGC, but with HPCL and MPRL as ONCG group companies, the earnings will be stable, said Shanker.