Management control issue may supersede issue of erosion of over 50% of peak networth

27-Mar-12
Haldia Petrochemicals is expected to erode more than half of its peak networth in FY11-12. However, a potential conflict between the lead promoters on management control may supersede ride the looming “potential sickness” of HPL during this weeks’ board meet, as per Businessline. Expectations that the West Bengal Government, in support of some participatory shareholders of the company, may claim control over HPL management. The State Government may draw its inspiration from the Supreme Court order on September 30, 2011 that had turned down the TCG' appeal for control of key 15.5 crore shares in HPL. The court also validated the key 9% share-holding of IndianOil, ignoring opposition from TCG. Change in management could give some direction to the company, there is adequate possibility that any such claim (by the State) would be contradicted by the lead private promoter -The Chatterjee Group (TCG), as it did in the past. As TCG currently holds a 44.2% majority in the petrochemicals vs 43.26% of the State Government; the IOC shareholding may play a crucial role. The Supreme Court ruling had understandably left options open to TCG to seek redressal for alleged breach of trust by the State Government for not transferring the 15.5 crore shares as per a “private agreement” between the two in 2002. The phased share transfer pact was scrapped midway during the previous Left Front rule. TCG has requested the State Government to stand by its commitments in 2002 and allow the private promoter to hold majority control in HPL.
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