At a time when promoters are yet to take a definitive stand on ownership issues, chances of the ailing Haldia Petrochemicals wiping out half its Rs 2,844 crore peak- net worth this fiscal, making it a fit case to be ‘reported' to BIFR as a “incipiently ( or potentially) sick company”.

Technically, potential sickness is distinctly different from a “sickness” - which makes it mandatory for the respective unit to undergo a revival plan under direct surveillance of BIFR – and should not lead to as much impact on flow of orders or bank finances. However, for the joint-stock HPL which has witnessed a crippling court-room battle between promoters for six years between 2005 and September 2011, and is now destined to end the fourth successive financial year in the red; any such development may bring more trouble in the horizon.

According to sources, accumulated losses for last three years led to erosion of nearly Rs 747 crore of the peak net-worth till 2010-11. To make the situation even worse, the company had lost Rs 460 crore in the first half of 2011-12 – leaving a slender margin of Rs 215 crore from reaching the danger zone of Rs 1,422 crore (50 per cent of Rs 2,844 crore).

While there is no official confirmation, market sources suggest that if the continuing turmoil in global petrochemicals prices be of any indication, HPL has accumulated approximately another Rs 200 crore of loss during the October-December 2011.

To make it straight, HPL is estimated to have nearly wiped out half of its peak networth of Rs 2,844 crore and any further loss in the fourth quarter will earn it the tag of “potentially sick” unit.

To fight against the odd the company, therefore, has adopted a range strategies - to save cost - including savings on energy consumption – and, enhancing returns by changes in product mix. Stress is also given on higher capacity utilisation and diverting maximum products to local markets which requires lower transportation cost.

While the efforts have paid off in the way of becoming EBIDTA (earnings before interest, depreciation and amortisation) positive in December; a late technical glitch in naphtha cracker which is due to be resolved and the overall market uncertainties will surely keep the company management on the tenterhooks for next couple of months.

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