Two days after the Calcutta High Court imposed a legal embargo on the West Bengal Government’s plans to divest its 40 per cent stake in Haldia Petrochemicals Ltd (HPL), the board of Eastern India’s only petrochemical company on Friday decided to refer it to the Board for Industrial and Financial Reconstruction (BIFR) as “potentially sick”.
After an extraordinary general meeting, Partha Chatterjee, State Commerce and Industry Minister and the chairman of the company, said there has been a “50 per cent erosion” in HPL’s net worth.
However, The Chatterjee Group (TCG), which holds a 41 per cent stake in the company, said HPL had “fully eroded” its net worth.
TCG Chairman Purnendu Chatterjee told reporters after the Board meet that efforts should be taken to prevent the company from falling sick.
Once listed by BIFR, HPL will face new challenges in raising finance. Being declared sick would also create roadblocks for the government’s disinvestment plans.
“Ideally, HPL should not be referred to the BIFR. That is not the way out,” said TCG’s Chatterjee.
Minister Chatterjee admitted that the going is getting tough for HPL. “All stakeholders have been apprised of the possibility of the company turning sick." He added that the Board will take the necessary steps to protect HPL from BIFR. He did not elaborate on the action plan or any capital infusion but indicated that the company will soon meet bankers to find a way out.
Share transfer
TCG’s Chatterjee refused to comment on the possible share transfer to Indian Oil Corp Ltd (IOC) citing that the matter was sub judice . On November 20, the Calcutta High Court ordered a status quo on transfer of 15.5 crore shares (around 9 per cent) held by the State till further orders.
The disputed shareholding is part of 67.5 crore shares (40 per cent) put on the block by the State Government.
Following an auction in October, IOC emerged as the sole bidder for the stake at Rs 25.10 apiece. The shares were slated to be transferred to the oil company, provided TCG decided against exercising its first right of refusal.
The minister said he is hopeful of completing the stake sale process by March 2014.
New MD
Meanwhile, U.K. Basu has been appointed as the new Managing Director till March 2014.
Basu was the former MD of Mangalore Refinery and Petrochemicals Ltd and an advisor to Oil and Natural Gas Corporation.