MRPL leaped on bargain hunting on Wednesday on hopes that the company may stage a turnaround, with ONGC taking over its management control.

The stock spurted 16.05% to Rs 9.40 on the BSE by 14:30 IST. A relatively higher volume of over 2.27 lakh shares was recorded on the counter. In the last eight sessions between 20 February and 4 March 2003, the stock had shed 11% to Rs 8.10 from Rs 9.10.

The smart recovery on the counter was due to bargain hunting, following hopes that the company may stage a turnaround after a change in management control. Earlier, state-run oil refiner Hindustan Petroleum Corporation's board of directors approved the sale of 51% majority stake (with management control) in MRPL, its equal stake standalone joint venture with the Aditya Birla group (39.37%), to state-run oil and gas explorer ONGC.

Analysts deem MRPL a ‘dark horse', implying that the company may come out with an excellent performance in the coming months. They also believe that the acquisition by ONGC will be mutually beneficial for both companies. It will enable ONGC to set up retail outlets under the marketing rights for transportation fuels. ONGC has been authorised to set up 600 petrol stations in four states.

ONGC had recently said that it would acquire the remaining stake of HPCL in MRPL of about 17%

Earlier, the Cabinet Committee on Economic Affairs cleared ONGC's proposal to acquire the A V Birla group stake in Mangalore Refinery & Petrochemicals.

Accordingly, ONGC picked up the Aditya Birla group's 39.37% stake in MRPL for nearly Rs 60 crore and plans to infuse another Rs 600 crore (Rs 6 billion) as equity.

MRPL has been virtually rescued from the clutches of the Board for Industrial and Financial Reconstruction.

If not for ONGC, the company may have been referred to the BIFR.

In December 2002, MRPL's board had, in fact, taken a decision to refer the company to BIFR as 50% of its peak net worth was eroded in the past four years through accumulated losses.

For the third quarter ended 31 December 2002, MRPL posted losses of Rs 130.3 crore (Rs 1.3 billion), compared to a loss of Rs 36.80 crore in the corresponding period of the previous year. Net sales increased by 89.8% to Rs 2,316.11 crore (Rs 23.16 billion) from Rs 1,220.50 crore (Rs 12.2 billion) in DQ 2001.