MRPL & RPL - Analyzing Risk and Returns

Case Studies | Case Study in Business, Management, Operations, Strategy, Case Study

ICMR HOME | Case Studies Collection

Case Details:

Case Code : FINC027
Case Length : 12 Pages
Period : 1993 - 2004
Pub. Date : 2004
Teaching Note :Not Available
Organization : Mangalore Refinery and Petrochemicals Limited (MRPL) and Reliance Petroleum Limited (RPL)
Industry : Petroleum and Finance
Countries : India

To download MRPL & RPL - Analyzing Risk and Returns case study (Case Code: FINC027) click on the button below, and select the case from the list of available cases:

Finance | Case Study in Management, Operations, Strategies, Business Ethics, Case Studies


For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Shipping & Handling Charges extra

Finance Case Studies
Short Case Studies
View Detailed Pricing Info
How To Order This Case
Business Case Studies
Case Studies by Area
Case Studies by Industry
Case Studies by Company

Custom Search

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Chat with us

Strategic Management Formulation, Implementation, & Control, 12e

Please leave your feedback

Leave Your Feedback

ICMR India ICMR India ICMR India ICMR India RSS Feed

<< Previous

"Four Indian oil companies feature among the top ten oil companies in Asia. Reliance Petroleum's market capitalization of Rs 288.24 billion is the highest among Asian refining companies."

- Goldman Sachs Database on Asian Refineries in 2000.


Mangalore Refinery and Petrochemicals Limited (MRPL) and Reliance Petroleum Limited (RPL) were the first two refineries established by the private sector in India.

In March 1992, MRPL brought out a public issue of shares, and in September 1993, RPL did the same. Both these refineries were established at a time when the administered pricing mechanism (APM)1 was in force. APM involved full government control over the oil and natural gas sector, where only four major government owned oil companies (IOC, HPCL, BPCL and IBP) had the right to directly market petroleum products (Refer Exhibit I). The government refineries were not able to meet the increasing demand for petroleum products. Hence, opening up of the oil and natural gas sector to private companies and dismantling APM were considered as methods for reducing the demand-supply gap of petroleum products.

Finance | Case Study in Management, Operations, Strategies, Finance, Case Studies

When the Government of India (GOI) approved private sector participation in the oil refining and petroleum industry, a new investment opportunity was made available to Indian investors.

Those who invested in MRPL and RPL were optimistic about the returns on shares of both these companies since reputed leading business houses such as the Aditya Birla Group (ABG)2 and the Reliance Group3 promoted these refinery projects. Due to the dearth of oil company stocks promoted by the private sector, the shares of both these companies were lapped up by public investors and financial institutions. Both the public issues were heavily oversubscribed. However, few investment analysts expressed their reservations about investing in stand-alone refineries like MRPL and RPL since they felt that the financial performance of companies in the refining industry was completely dependant on the crude oil prices.

MRPL & RPL - Analyzing Risk and Returns - Next Page>>

Custom Search


Marketing Financial Products
Textbooks Collection

Case Studies in Finance Vol III

Case Studies in Finance Vol III
e-Book on Case Studies in Finance

Case Study Volumes Collection

1] The government-controlled APM for petroleum products is based on the retention price concept, under which oil marketing companies are compensated for operating costs and assured a return of 12% after tax on net worth. This concept ensures a fixed level of profitability for oil marketing companies, subject to their achieving specified capacity utilization. APM ensures that products such as kerosene (used by the economically weaker sections of the population), and diesel (used by public transport and agricultural sector) are protected from the volatility in international oil prices.

2] The Aditya Birla Group is one of India's largest business houses. The group includes companies such as Grasim, Hindalco, India Rayon and Indo Gulf.

3] The Reliance Group was among the largest business houses in India, with interests in several businesses including textiles, petrochemicals, petroleum products, oil & gas, power, telecom, synthetic fibers, fibre intermediates, financial services, refining & marketing and insurance.


Case Studies Links:- Case Studies, Short Case Studies, Simplified Case Studies.

Other Case Studies:- Multimedia Case Studies, Cases in Other Languages.

Business Reports Link:- Business Reports.

Books:- Textbooks, Work Books, Case Study Volumes.