Mumbai, June 1: Mangalore Refineries and Petrochemicals (MRPL) will float fully convertible debentures (FCDs) aggregating Rs 726 crore. The promoters, the AV Birla group and Hindustan Petroleum Corporation, who hold 26 per cent equity each in the project, will subscribe equally to the FCDs.

The funds will partly be used to finance the second phase of MRPL's ambitious project, in which capacity will be expanded from three million tonnes per annum to nine million tpa, at an estimated cost of Rs 3,690 crore. Of this, Rs 1,397 crore will be funded through equity, the remainder being debt-financed.

Further, of the debt component, Rs 1,628 crore will be in domestic rupee debt and the remainder Rs 665 crore in foreign currency loans, Birla sources added. The foreign currency loans comprise Rs 100 crore as commercial loans and Rs 565 crore in Japanese-Exim Bank (J-Exim) loans. MRPL has already got the Union cabinet's approval to increase capacity.

After subscribing to the FCDs, the stakes of the promoters will go up temporarily in the venture. "This will be adjusted and our stakes will come down to the original level of 26 per cent each when we make a public offering at a later stage", Birla officials said.

They added that MRPL has opted for FCDs because the fixed coupon would ensure assured returns to the subscribers, in this case the promoters.Meanwhile, according to Birla executives, MRPL's dues from the oil pool account are currently around Rs 600 crore. "These receivables have been bridged by availing ourselves of short-term loans from banks and institutions, as also contributions from Birla group companies," said sources. However, analysts say that MRPL's oil pool dues are nearer to Rs 1,000-1,100 crore.

MRPL will face rough weather in its operations if a petro-products price hike is not affected quickly. Others will also be hit, petroleum ministry sources say, including Madras Refineries, Bongaigaon Refinery and Petrochemicals and Cochin Refineries. These units also face the same threat as MRPL, which may turn out to be a horrifying reality if the situation remains the same till August.

The big three, Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have also had to make heavy borrowings to tide over the crisis.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.