Mangalore Refineries and Petrochemicals Ltd in consortium with IndianOil may bid for management control in the ailing Haldia Petrochemicals Ltd, according to sources. Both the companies are currently in active negotiation.
IOC already has nine per cent stake in HPL. MRPL - a ONGC group company - is in negotiation to bid for West Bengal Government's undisputed 43 per cent stake holding in HPL. ONGC-MRPL is expected to meet the State Government in this regard, this month.
Win-win
According to sources joining hands of ONGC and IOC may offer the best solution to resolve HPL's problems both in terms of finances as well as feedstock availability and marketing.
IOC, for example, is a major player in petrochem sector; supplies 20 per cent of naphtha requirement of HPL from its neighbouring Haldia refinery and has requisite expertise in running petrochemicals.
ONGC-MRPL, on the other hand, has adequate cash; can offer naphtha from its expanded Mangalore operations. The group is set to enter the petrochem market through ONGC Petro Additions Ltd.
Equity infusion
HPL, in the meantime, is told by the SBI-led bankers' consortium to infuse fresh equity to improve the liability-net worth ratio from the existing 3.4 to the prescribed two without which the cash-strapped petrochem cannot be offered fresh advances. HPL has lost Rs 1,920 crore in last four years and has is now running at 55 per cent capacity leading to huge losses in April-May. As in March, net worth stands at Rs 1,467 crore against a total liability of Rs 5,000 crore.
Board meet
Theoretically, bids from MRPL and IOC bring perfect solution to HPL's financial crisis. Sources, however, feel that the solution may not be as easy to arrive for two reasons: first, private promoter The Chatterjee Group (TCG) has the first right of refusal for any such stake-sale proposal.
Secondly, inclusion of new investors would require a consensus on disputed issues between the owners. As things stand now the two sides are in a combative mood.
All eyes will, therefore, be on the scheduled board meet of HPL. Till that happens, HPL has turned out to be a poacher's heaven with nearly 70 executives jumped the ship in last couple of months.