Call for meeting with important lenders of HPL signals government’s intent to play a more active role in management

21-Feb-12

Bengal industry minister has called for a meeting with the important lenders of Haldia Petrochemicals Ltd (HPL) to discuss the company’s performance. “I have called a meeting of all financial institutions on Monday. I will seek their view on how to strengthen the company,” Partha Chatterjee told The Telegraph.This signals growing intent by the state government in playing a more active role in managing HPL. Until recently, private promoter Purnendu Chatterjee of The Chatterjee Group has been allowed to run the company without any interference. This meeting will be the first initiative by the new administration that is making peace with Chatterjee. HPL has suffered a loss of over Rs 800 crore in the first nine months of this financial year. The meeting, where the troubled ownership issue between Chatterjee and the government is likely to be raised, could be attended by industry secretary Basudeb Banerjee and West Bengal Industrial Development Corporation MD Nandini Chakravorty. Besides IDBI, the lead banker for a group of financial institutions who provided long-term loan, and the State Bank India, the lead banker for short-term working capital borrowing, representatives of other banks like IFCI, Punjab National Bank, Allahabad Bank, ICICI Bank and Union Bank of India, have also been called. Two reasons add significance to this meeting: Promoter Chatterjee has been saying all along after the apex court judgment that TCG should be made the absolute majority owner by transferring the contentious 15.5 crore shares from the WBIDC. He claimed that HPL would continue to perform badly unless ownership issues were resolved, and that the company needs fresh loan to execute new projects to give the company long-term viability. However, no financial institution seems keen to give a loan to HPL until the ownership issues are sorted out. Interestingly, the government maintains that HPL’s problem do not stem from the ownership issue but is a result of a downturn in the petrochemical market. Another issue that could be discussed is the non-implementation of the corporate debt-restructuring package of 2004. Under this, the company was to convert a Rs 135-crore loan into equity. But this could not be been done because TCG and the WBIDC had been locked in legal battles between 2005 and 2011.