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The stake sale process of the West Bengal government in Haldia Petrochemicals Ltd (HPL) has taken a new turn with The Chatterjee Group (TCG), one of HPL's key promoters, bringing out an advertisement cautioning probable bidders for the government's stake.
"This is to give notice that any person submitting an expression of interest for the purchase of/purchasing aforesaid the 675 million shares, is doing so subject to all existing rights of CPMC (Chatterjee Mauritius Company)/CPCL (Chatterjee Petrochem India Pvt Ltd) under various agreements with GoWB/WBIDC and entirely at their own risk and peril," the advertisement said.
The reason behind the advertisement is that the 155 million disputed shares, key to get the management control in eastern India's biggest petrochemical company, happen to be part of the 675 million shares that the government has put on the block. The 675 million shares translate to around 40 per cent of HPL.
The West Bengal government has around 40 per cent stake in HPL via West Bengal Industrial Development Corporation (WBIDC). TCG, though, will have the first right of refusal.
"The disputed 155 million shares are no more on the balance sheets of WBIDC. How can the government offer to sell them? Thus, we thought it was necessary to let everyone know what they are getting into," said TCG President Anirudha Lahiri. "TCG has made payments to WBIDC. But the state industrial development arm has stopped accepting the payments owing to reasons best known to them," Lahiri said.
Lack of funds
In 2002, an agreement was signed between WBIDC and TCG that the 155 million shares, or 10 per cent, of the state government holding would be transferred to the TCG. These shares were issued to TCG in 2005 at Rs 10. TCG had taken a loan from WBIDC to purchase these shares and again had pledged it to WBIDC. TCG was supposed to repay the loan and subsequently the shares were supposed to be transferred to TCG. However, it didn't happen and ultimately ended in a legal battle. In 2011, the Supreme Court dismissed a petition by TCG against the decision of the Calcutta High Court, setting aside the Company Board Law directive to exit the project by selling its stake to TCG. Again, in January 2013, TCG filed a special leave petition (SLP) in the Supreme Court, challenging the Calcutta High Court order that barred TCG from filing a petition in the International Court of Arbitration in France.
Lahiri said the group was worried over the fate of the plant, as legal issues might take a long time and without immediate funds, the plant might have to shut down. HPL is expected to report a loss of around Rs 600 crore at the close of the last financial year. Over 50 per cent of its net worth has been eroded.
