HPCL in talks of MRPL merger | Exclusive interview with M Venkatesh, MD MRPL

Team Udayavani, Jun 26, 2018, 3:23 PM IST

With the capacity to refine the highest amount of crude oil in the nation, Mangalore Refinery and Petrochemicals Limited (MRPL) is one the largest public-sector company in India. MRPL, which does an annual turnover of more than 60,000 crore rupees and fulfils 75% petrol and diesel requirement of Karnataka state has now received proposal to merge with Hindustan Petroleum Corporation Limited (HPCL). The decision to purchase MRPL will be taken by the end of this financial year, informed Mukesh Kumar, President of HPCL. On the other hand, the process of procuring land for MRPL’s 4^th phase of expansion is already taking place.

MRPL is considered to be the pride of Dakshina Kannada, and its next move has created a widespread curiosity not only amongst the people of the coastal city but also on the national financial front. Amidst this development, M. Venkatesh, who hails from Mysore, has been appointed as the new Managing Director of MRPL. Here is a special conversation of M Venkatesh with ‘Udayavani’ on the merger with HPCL after being appointed on the topmost level of MRPL for the first time. The interview is by Suresh Puduvettu and translated to English by Aaron Dmello.

Do you feel honored to lead a prestigious company like MRPL?

“MRPL started functioning in 1996 and has now grown to the capacity of refining the highest amount of crude oil in the country, which is a matter of pride for entire `Karnataka. The high-quality products we produce and every single employee working for this company is responsible for this immense growth in its good standards and financial stature. I was born in Mysuru and joined the company in 1994. As a ‘Kannadiga’, I truly feel, both proud and happy to carry the responsibility of this huge a company. The employees from all over India working together as a family here is also the reason for my achievement and opportunity in a company like MRPL.

When you started working here, did you dream of reaching such a high position?

Definitely not; Due to various reasons, it has reached me. I had only one aim – To make MRPL a model Petro-chemical company in the entire nation. Now, it has become true. From the standard of the products to the capacity of the entire refinery unit, MRPL has now shined throughout the country. How would the situation be if there is no fulfilment of petrol-diesel for a day here? Therefore, from the standpoint of view of the nation’s financial development and security, MRPL is an important company.

What is the production capacity of MPRL now?

“MRPL refinery has the capacity of refining 16 million tons of crude oil annually. There is no crude oil refinery unit in the country which can refine at such large capacity. Currently, the annual production of diesel is 6-7 million tons, petrol is 1.2 million tons and 1 million tons of LPG is produced.

Now there is talk that a massive company like MRPL is merging with HPCL?

HPCL and MRPL company, both come under ONGC. So when it has the same parent company, ONGC decides if the two companies should merge or not. Hence, saying if it’s right or wrong is not possible. The decision may be taken together by the board of the two companies, ONGC and HPCL. But, there is compatibility seen when MRPL is viewed as a petrochemical company and the marketing set up of HPCL.

If so, then has the merging process begun?

It is true that talks are taking place at different levels for the merger of HPCL-MRPL. A high-level committee has been created for this, and since both the companies are subsidiaries of ONGC, the committee will carry studies on the method of merger and the compatibilities of the two companies. But, since both the companies are government institutions, the method of the merger will be a tad different from that of a private company’s merge.

Can this be viewed as the largest merger in the oil sector industry?

Definitely. MRPL does a business of over 60,000 crore rupees. If such a company merges with HPCL, there is nothing wrong in considering the merger to be the largest merger in the oil sector of the country from the point of view of money and basic facilities.

What are the pros of this merger?

MRPL’s oil refinery unit has the capacity of refining 16 million metric tons of crude oil. Similarly, HPCL Company also possesses the capacity to refine 16 million tons of crude oil. If these massive oil refining companies’ merge, the total capacity of annual crude oil refining will jump to 32 million tons of crude oil and would make HPCL as one of the largest oil refining companies in the country. Talks are on to merge these two public sector companies and thereby further increase their functional capacity and financial position. If it becomes reality in the future, MRPL will avail the marketing facilities of HPCL. According to my opinion, HPCL will gain a greater profit than MRPL through this merger.

Meaning to say, HPCL’s business will increase?

The merger with MRPL will eliminate HPCL’s shortage in availability of oil products and also expand its market. Also, since MRPL has a particular unit for the production of polypropylene, HPCL’s market will also extend in this direction.

Will MRPL’s brand name disappear due to this merger?

I have faith that MRPL’s brand image will continue even after the merger. Normally, when a company merges with another company, the acquiring company decides on the brand of the merged company. Hence, even if MRPL name goes, the excellent brand image of Mangaluru Refinery may continue under HPCL. This way there is a better opportunity for Mangaluru Refinery to grow to even greater heights with HPCL, using the brand to produce products of even higher standards.

What are the new plans for MRPL?

The present aim is to improve the petrol-diesel fuel grade to Bharat Stage-6 (BS-6). In 2000, a rule was introduced to give only unleaded petrol-diesel in the country. But, we have been producing unleaded fuel from the start, since 1996. MRPL was first in the country to distribute BS-4 stage fuel. In the same way, as per the new rule, the consumers should be given BS-6 grade from 2020. Now, we have taken up the plan to produce BS-6 grade fuel and have invested close to 1,800 crore rupees for it. Also, we have another plan to increase the production capacity of polypropylene from 16 million metric tons to 18 million metric tons.

According to you, will India ever become self-reliant in the preparation of petrochemicals?

Definitely. It is possible. If the emphasis is given to producing high-value petroleum from crude oil, in the next 15 years, our country too can become self-reliant.

According to you, what is the alternate for the sky-high priced petrol/diesel?

Petrol-Diesel prices reflect the changes in the prices in crude oil. Hence, the central government should give importance to the use of clean energy. In this way, the use of natural gas must increase. The only alternative is that everyone must convert to the use of gas and reduce the use of Petrol and Diesel.  In the next three years, the basic facilities for the use of gas will be ready in Dakshina Kannada and Udupi districts. In this way, the fuel available now at the price of 80 rupees will then become available at the price of 40 rupees.

Can tar be converted into Petrol-Diesel?

Yes. When we refine crude oil, we get tar. This tar can also be converted into LPG. Not just that, even polypropylene can be obtained from it. Presently, the tar we get from refining crude oil is only being used to construct roads. But, from this tar too, excellent quality petrol-diesel and LPG can be produced. Now, MRPL too has started investing money in researching on how to convert tar produced while refining crude oil, into fuel.