With the Supreme Court finally delivering the much-awaited verdict on ownership control of Haldia Petrochemicals on Friday, the joint stock company may finally get an opportunity to set its business agenda right in the next couple of months.
Court Order
In its order on September 30, the apex court turned down the appeal from The Chatterjee Group – the private partner – for control of key 15.5 crore shares to ensure its majority ownership in HPL. The Supreme Court also upheld an earlier Calcutta High Court order which had apparently put the West Bengal government in the driving seat with 43.29 per cent stake (excluding preference shares) against 42.72 per cent of TCG.
Indian Oil's stake
The order has also validated Indian Oil's close 9 per cent stake-holding in the company. The inclusion of IOC (by way of offering share at face value of Rs 10 each) had fuelled the dispute between the two main promoters in 2005. The State wanted to sell its stake to TCG at Rs 18 “control premium” per share.
Emerging dynamics
The apparent setback to TCG's aspirations notwithstanding, informed circles suggest that Friday's order may actually pave the way for the New York based venture capitalist Mr Purnendu Chatterjee to gain control over the Rs 10,000 crore standalone petrochemicals company.
While officially both sides are tight-lipped on the possibilities, sources say that the State Government is set to come out with an offer to offload its stake, either partly or fully, in a span of next two to three months. The Ms Mamata Banerjee-led State Government, which had already extended tacit support to TCG Group's leadership in turning HPL around, has decided to appoint SBI Caps to do the valuation exercise.
With TCG enjoying the first right of refusal, Mr Chatterjee will definitely have his opportunity to stake claim over HPL, sooner than later.
Lower valuation
What is more, considering that the company has incurred an accumulated loss of approximately Rs 1,000 crore in the last three financial years ( topped up by another Rs 400 crore loss till September), the “control premium” should definitely be much lower than previously decided.
The previous Left front government often blamed Mr Chatterjee for failing to arrange funds for the takeover to justify inclusion of IOC. Without getting into the veracity of such claims, one can safely say that leveraging the buyout in a recession hit market may possibly be the only challenge for TCG at this juncture.