The imbroglio over the Haldia Petrochemicals (HPL) project might end soon, with the plant reopening, as lenders have agreed to infuse fresh funds into the loss-making company, whose net worth has eroded completely. This follows a meeting of the board of directors on Sunday. An announcement in this regard during the Bengal Global Business Summit will be a face-saver for the Mamata Banerjee government, under fire for closure of industries and inability to attract investment in the state.
According to a source, banks have decided to infuse funds after Purnendu Chatterjee, chairman of The Chatterjee Group (TCG), agreed to invest Rs 100 crore as margin amount into the ailing plant. TCG is one of the principal promoters of HPL, along with the West Bengal Industrial Development Corporation (WBIDC). "Lenders will agree to infuse funds when the promoter shows interest. Now that he has agreed to bring 10 per cent of the cash, we are ready to pay the rest," said the source. He said the management had asked for Rs 1,000 crore to buy naphtha, the main feedstock.
The main lenders to HPL are Industrial Development Bank of India, State Bank of India, Punjab National Bank, ICICI Bank and Industrial Finance Corporation of India. The banks will tread with caution and will lend the total money in tranches. "The lenders don't want HPL to become a non-performing asset, so they have decided to lend money but in instalments and only after judging the performance of the plant," said the source. The prospect of the plant reopening has become brighter due to the falling price of naptha, its main raw material, in the world market. Operations were suspended since July 7 due to a shortage of working capital, though the official reason was a technical snag in the naptha cracker unit. According to a company official, the plant is completely fit to reopen. "Since TCG has now agreed to pay the margin amount, the fresh funds should be used to buy fresh feedstock rather than paring debts," he said.
With the plant set to reopen, all eyes would be on TCG, to assume management control after the Competition Commission of India gave its nod to the proposed share transfer agreement with WBIDC. TCG had agreed to buy 520 million shares (30.8 per cent of the equity) of WBIDC at Rs 25.10 each, matching the price offered by Indian Oil Corporation after the government invited an Expression of Interest last year.
