Haldia Petrochemicals Ltd's (HPL) reputation is being ripped apart on charges of mismanagement made by its own board members.
HPL's vice chairman Purnendu Chatterjee, in a 'privileged and confidential' letter, has revealed mismanagement that may result in a Rs 1,273 crore loss to the company. The 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 amounts to Rs 686 crores.
Additionally, in a meeting in Mumbai on November 26, another Board member- Jamshyd Godrej, has raised questions about management issues. The same meeting witnessed HPL managers seeking permission to defer an ongoing expansion project by another eight months. This project has already been delayed by over a year.
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.
Interestingly, the HPL management is backed by the West Bengal government. Both the Chatterjee Group and the HPL management refused comment.