Haldia Petrochemicals Ltd (HPL) has approached major oil and petrochemical companies with an offer for a strategic tie-up, extending to a possible equity participation.
While negotiations between HPL and Indian Oil Corporation (IOC) for a deal on these lines has made some progress, sources close to the development said HPL's promoters have not been foolish enough to put all their eggs in one basket.
Although the promoters and top brass of HPL are tight-lipped about the development, informed sources said the companies approached were being offered a state-of-the-art plant that was ready to commence commercial production.
Purnendu Chatterjee, the principal promoter of HPL through his holding company The Chatterjee Group (TCG), said he "would not comment on a commercially sensitive topic."
Negotiations between IOC and HPL have been progressing, with KPMG having filed a positive due diligence report on HPL.
Moreover, the Union petroleum minister Ram Naik has assured the West Bengal government that the Centre would not let the project down.
The West Bengal government is the other major promoter of HPL, holding equity equal to TCG's stake. The Tatas hold a small stake too.
However, HPL does need the support of a fourth investor as the Rs 5,170 crore project has been funded with Rs 1022 crore of equity and Rs 4,000-crore debt and has been crippled by heavy interest payment obligations.
The project has failed to raise additional equity of around Rs 1,000 crore through a public issue owing to depressed markets.
Sources say HPL has three options now. a) The company could bring in IOC as an equity partner. b) It could find some other investor. c) It could persuade financial institutions to restructure its loan.
At present, HPL is incurring operational losses due to heavy interest outgo during trial runs.
There have been two rounds of talks between IOC and representatives of HPL's promoters but so far no decision has emerged.
Discussion were on and sources said the two parties were trying to work out a formula to determine HPL's enterprise value as well as possible routes for IOC's participation.
IOC was reportedly interested only in HPL's naphtha cracker and did not want its polymer processing division.
However, it softened its stand and was willing to look at the entire company, partially because the West Bengal government refused to part with only the naphtha cracker.
