West Bengal's industrial crown jewel Haldia Petrochemicals Ltd (HPL) is being ripped apart by charges of mismanagement made by its own board members.
A 'privileged and confidential' letter written by the company's vice chairman Purnendu Chatterjee has brought to the fore mismanagement that may result in a Rs 1,273-crore loss to the company. To top it, in a meeting in Mumbai on November 26, industrialist Jamshyd Godrej, a member of the HPL board, raised questions about management issues. In that meeting, HPL managers sought permission to defer an ongoing expansion project, already delayed by more than a year, by another eight months.
Besides, the management now seeks to raise Rs 400-crore loans for the project that was earlier supposed to be funded through internal funds. The delay and fresh loans will push the loss to the company far beyond the Rs 1,273 crore calculated in Chatterjee's letter.
that the management failed to push through its requests in the project review committee meeting chaired by Godrej. The committee has sought explanation as to why the management needs a fresh round of cost and time overrun. It is learnt that the HPL management, in turn, has put the blame for the delay on Toyo Engineering, the contractors for the project. Interestingly, the HPL management is backed by the West Bengal government. Both the Chatterjee Group and the HPL management refused comment.
The Chatterjee group has reportedly been alleging mismanagement for quite some time. Its letter mentions a Rs 306-crore expenditure towards increase in project cost and Rs 66 crore additional interest on cost of construction from delay in project implementation from December 2006 to April 2008. The move to shut down the plant for 75 days, instead of the originally envisaged 39 days, has cost the company Rs 215 crore. And finally, the loss of contribution on the increased capacity from the delay of 16 months, according to the letter, is a whopping Rs 686 crore. All these add up to Rs 1,273 crore cost overrun.
Haldia's executive head Swapan Bhowmik also declined to comment.