Lenders headed by IDBI compel Haldia to audit expansion program

Haldia has approached its lenders for financial support of Rs 400 crore for completion of its expansion project - Project Supermax. Supermax was to originally cost the company Rs 675 crores, but will now cost Rs 1,100 crore due to delays. Lenders of Haldia Petrochemicals Ltd (HPL) led by IDBI have forced the company to appoint an independent consultant-Mott to carry out a techno-economic feasibility study for Supermax. HPL had initially planned to fund the expansion program through internal accruals. However, the company reported a loss of Rs 275 crore in 2008-09 (unaudited) as compared with a profit of Rs 279 crore a year ago. This plunge in financial performance has forced the company to approach the consortium of banks and financial institutions for a loan. Rising naphtha prices have contributed towards complicating the matter for HPL, as the company’s margin would have been better if naphtha prices were more controlled. Project Supermax, currently at an advanced stage of implementation, will result in capacity increase by approx 30% with a subsequent proportionate increase in capacity of the downstream plants.
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