MRPL & RPL - Analyzing Risk and Returns |
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"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. IntroductionMangalore Refinery and Petrochemicals Limited (MRPL) and Reliance Petroleum Limited (RPL) were the first two refineries established by the private sector in India.
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.
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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. |
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