At the end of June, HPCL held a 16.95% stake in MRPL, and ONGC, the other promoter, owned 71.6%. The public shareholding in MRPL was 11.42%, less than half the 25% prescribed by the Securities and Exchange Board of India (Sebi).

“ONGC holds majority share in MRPL while our shareholding is small in comparison. We would prefer if ONGC offloads (a part of) their stake for MRPL to meeting the public holding norm,” one of the HPCL officials cited above said, requesting anonymity.

MRPL and ONGC did not reply to emails sent on Friday.

At MRPL’s annual general meeting, held on 3 September, the company said it authorised its board “for exercising any of the options available” to meet Sebi’s public shareholding norms. Options before the board include divestment of the promoters’ shareholding through an offer for sale or issue of fresh shares by MRPL through a public offer.

HPCL prefers that ONGC sell a part of its stake rather than having its own stake diluted, according to the second HPCL official, who also spoke on condition of anonymity.

MRPL has shareholders’ approval to raise upto Rs.3,000 crore through a sale of non-convertible debentures.

HPCL is one of the original owners of MRPL along with the Aditya Birla group, both owning 37.4% each in the refiner. In 2003, ONGC bought out the latter’s stake in the loss-making company.

Through successive rounds of restructuring and infusion of fresh capital, ONGC gradually increased its holding to 71.6%.

In the June quarter, MRPL reported a 77.7% increase in net profit to Rs.720 crore on the back of a strong gross refining margin of $10 per barrel. MRPL shares closed at Rs.84.55, up 1.02%, on Friday while the Sensex closed at 28,797.25, down 0.85%.

MRPL is not the only company racing to meet public shareholding norms. According to the Capitaline database, at least 14 state-run companies including Coal India Ltd, HMT Ltd, NBCC (India) Ltd, SJVN Ltd and MMTC Ltd have to increase their public float within a year.

A combination of factors such as a steep run-up in share prices of some firms and continued losses in case of others have hindered public stake sales.

In October 2014, the government notified rules for minimum public shareholding in listed state-owned firms. To comply with these norms, listed public sector firms will need to raise their public shareholding to a minimum 25% by August 2017. This was proposed to help widen the investor base in listed state-run companies and to help boost the government’s plan to raise funds through disinvestment programmes.