The Bengal government has decided to quit its showpiece project, Haldia Petrochemicals Ltd, as a shareholder by June 30, thereby ending a 28-year-old chapter in the state’s industry history.
“The West Bengal Industrial development Corporation (WBIDC) has set a deadline of June 30 by which the government will exit HPL,” industry minister Partha Chatterjee said on Friday after a four-hour board meeting of the embattled company. HPL is a joint venture between the state government and The Chatterjee Group (TCG).
Chatterjee, who is also the non-executive chairman of HPL, said WBIDC has already appointed Deloitte as its adviser to evaluate HPL share value. “We expect the entire process of valuation, auction and exit of the state government to be completed by June 30,” he added.
The state floated the project during the ’70s to create growth and employment opportunities. After much political wrangling, HPL was incorporated as a public limited company on September 16, 1985, to implement the petrochemical project conceived by the government in public interest.
Friday’s meeting became stormy after TCG chairman Purnendu Chatterjee offered to pump in Rs. 500 crore, provided the government sold its shares at Rs. 10 -a-share and handed over management control to him.
“I questioned him about the contradictions in his own statement. On one hand, he wasn’t ready to spend a single penny as a promoter to bring the company out of the red. But when it came to getting management control, he was ready to pump in Rs. 500 crore. Even the lenders questioned him on this issue,” Chatterjee said.
HPL, with a turnover of around Rs. 10,000 crore, is reeling under a massive loss of more than Rs. 1,900 crore and debt of Rs. 4,000 crore. The firm is limping and the plant is running with just around 50% of its capacity because of paucity of funds to purchase raw materials.
The industry minister said the lenders had been asked to provide R1,000 crore for eight months. “After that we can start talking with the lenders on conversion of debt to equity. During the Left Front regime, the lenders waited for eight years for conversion of debt worth Rs. 128 crore to equity. I’m sure they can now wait for eight months,” the minister said.