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The Silicon Review Asia

HPCL Will Now Acknowledge ONGC as Promoter as Per Government Directives

HPCL Will Now Acknowledge ONGC as Promoter as Per Government Directives

The government, according to sources, has directed the state-owned oil and natural gas firm, Hindustan Petroleum to acknowledge ONGC as a promoter in regulatory filings in order to eliminate the challenging contest that has been happening between the two companies since a long time. It has blocked the synergy gains from the Rs 37,000 crore acquisition deal.

ONGC has previously made attempts to assert its authority but HPCL management has obstructed its attempts. The ongoing bitter relations between the two firms have affected the HPCL-MRPL merger plans resulting in its deferral. In public filings of its shareholding pattern, HPCL identifies the President of India with zero stakes as the promoter and ONGC with 51.11% stake as a public shareholder. As ONGC is put under the category of a public shareholder, it might have to go through the risk of losing the regulatory exemption from making an open offer to other HPCL shareholders. The exemption was made on the basis that the deal was a share transfer between promoter entities.

Last fiscal year, the deal that helped the government go beyond its divestment target in return used up all of ONGC’s cash. As a result ONGC was debt-laden for many years along with an acquisition that was beyond the firm’s control. In the HPCL’ board, ONGC has just one nominee and therefore it is trying to bring forward this issue of promoter. But its subsidiary has ignored this issue.

The matter hasn’t got much attention from the oil industry also, but due to the persistent efforts and representations by ONGC and a view from the law ministry, the oil ministry was bound to issue a directive to HPCL to give the recognition to ONGC along with the President of India as promoter.

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