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Good times are back for Bengal's showpiece industrial project Haldia Petrochemicals (HPL). With lenders showing increased confidence, the plant, which was crippling due to shortage of loans and raw materials, is now functioning at optimum level and is gaining back market share helped by an upturn in the commodity cycle.
After six months of closure, HPL hobbled back to normalcy in February after one of the principal lenders, State Bank of India (SBI), sanctioned Rs 350 crore as working capital. This led to the other lenders loosening their purse strings.
"The plant is operating at almost 85 per cent efficiency and production is on at full capacity," said Ashutosh Bose, chief financial officer and executive vice-president, HPL. At the time of closure, the plant was running at less than 50 per cent capacity. After that it developed a technical snag, leading to the prolonged closure coupled with the problem of lack of working capital to procure feedstock naphtha.
The consortium has agreed to sanction Rs 2,300-crore restructuring package to the plant. "After intense discussions, we agreed to refinance HPL provided that the promoter had agreed to bring Rs 250- 300 crore," said a banker.
According to him, the Reserve Bank of India's decision to grant special dispensation package to HPL also helped the plant in getting loans as the lenders don't need to term the exposure to HPL as non-performing asset (NPA) anymore. The consortium of lenders led by Industrial Development Bank of India (IDBI) includes SBI, Punjab National Bank, ICICI Bank and Industrial Finance Corporation of India.
"Right now, we have adequate working capital, with the financial support from banks. The company has also been able to win back customers who could not be supplied when the plant was shut," Bose said.
Following a rebound in crude oil prices, prices of polymers and petrochemicals have recovered in the past three months. This has also helped HPL.
"The market has seen a recovery; during the downturn, processors were manufacturing less when the prices were down, which created a shortage, so the recent recovery has also seen increased demand allowing HPL to increase price," said Ramesh Rateria, vice-president of Indian Plastic Federation (IPF).
HPL, one of the largest manufacturers of high-density polyethylene in the country, supplies different grades of polymers mainly in the eastern Indian region. According to industry estimates, HPL has a share of 12.8 per cent in the country's polymer industry when it operates at an optimum level.
The long closure of HPL had disrupted the supply of polymers to plastics processors, especially the makers of injection-moulded products such as syringes, crates, buckets, filaments, etc. As a result, many such units had to close down. As of now, the company is meeting the demand of all the downstream units that were reeling under pressure after HPL's shutdown.
