Haldia Petrochem to post 3-fold increase in revenue

Its revenue during 2014-15 was only Rs 3,097 cr, because its plants were shut from July 2014 to January 2015 due to acute cash crunch

Haldia Petrochemicals Ltd (HPL), once considered a ‘potentially sick’ firm, is set to post a three-fold increase of in its top line at Rs 10,000 crore for 2015-2016, company sources said.

Its revenue during 2014-15 was only Rs 3,097 crore, because its plants were shut from July 2014 to January 2015 due to acute cash crunch. In 2013-14, it earned Rs 8,130 crore though posting net losses.

“At this time, the economy is upbeat as we too are upscale and are utilising 95 per cent of the seven million tonnes of installed capacity,” a senior HPL official told Business Standard.

CASH CRUNCH

• During 2011-12, the situation in HPL started worsening as operations got seriously affected due to cash crunch
• It took the firm on the verge of being reported to the Board for Industrial and Financial Reconstruction

For 2014-15, HPL’s gross profit stood at Rs 498.6 crore. For 2015-16, too, the firm is bullish on reaping profits. Nevertheless, its accumulated consolidated losses account for Rs 3,662 crore as on March 31, 2015.

During 2011-12, the situation in HPL started worsening as operations got seriously affected due to cash crunch, taking the company on the verge of being reported to the Board for Industrial and Financial Reconstruction. This implied that its accumulated losses were half its peak net worth.

While the debt situation of HPL has remained stagnant at Rs 4,000 crore, the company has been able to stage a turnaround last year, improving its operating margins.

As on April 23, 2016, HPL’s assets stood at Rs 264 crore. Nevertheless, servicing the existing loans, which account for Rs 630 crore a year will continue to be a drag on the company.  “We are now aiming to consolidate our business entities so that we may improve our operational performance,” a senior HPL official told Business Standard.

It has already approached the Calcutta High Court to amalgamate Haldia Cracker Complex (HCCL) and Bengal Cracker Complex (BCCL) – its wholly owned subsidiaries - with itself, which will increase the company’s paid-up capital.

HCCL has a paid-up capital of Rs 617.56 crore, while BCCL has a Rs 203 crore paid-up capital which will get added to the Rs 1,959 crore paid-up capital of HPL after the merger.

The move follows The Chatterjee Group (TCG) – the majority stakeholder in HPL – spending Rs 653 crore to buy 260 million shares from the West Bengal government, increasing its stake to from 41 per cent to 53 per cent, thereby giving TCG greater control over the petrochemicals project.

According to the official, the internal operational processes in HPL got “scattered too much” owing to the subsidiaries. These subsidiaries were set up with the original intention to attract more investments but then ran into losses. However, years of bad management owing to the company’s shareholding pattern had led to the company’s net worth declining steadily and its debts rising.

“The merger of our two subsidiaries with the parent company will also help us improve the net worth of the company,” said the official without giving the details of the net assets of subsidiaries.

Now on a revival mode, HPL – the third biggest industrial project in West Bengal - is aiming to restore its lost glory. During 2011-13, when the company went through one of its worst phases, most of its highly skilled personnel had left their jobs. HPL is now filling up those vacant posts with world-class professionals.