Haldia Petrochemicals manages to stay off BIFR, will not become an NPA

16-Apr-14

Haldia Petrochemicals has managed to stay out of the purview of Board for Industrial and Financial Reconstruction (BIFR). Additionally, the company will also not become an NPA (non performing asset) of financial institutions. HPL was faced with the twin threats as the state owned company witnessed continuous losses for over a year, leading to erosion of its net worth and substantially reducing its debt re-payment capability, as per Times Of India. HPL has a negative net worth of over Rs 60 crore and accumulated loss of Rs 3,000 crore. The lenders jointly have an exposure of Rs 4,000 crore in the company. In order to keep out of BIFR, the company has transferred real estate under Haldia Real Estate Ltd (HREL) to Haldia Cracker Complex Ltd at current market value, thus turning its net worth positive. Both HREL and HCCL are wholly owned subsidiaries of HPL. HREL has 221 acres outside HPL plant complex. HPL had bought the land for Rs 7 crore. HREL has a paid up equity of Rs 17.50 crore, so effectively the land now is valued at that price. However, the current market value of the land is over Rs 200 crore. "A book transfer at current market value turned HPL's book positive," said sources. There was another round of financial restructuring which regularized HPL's accounts in the books of lenders helping it avoid the NPA tag. The petrochem firm has Rs 1,700 crore term loan and Rs 2,000 crore working capital loan. The main lender for term loan is IDBI Bank while SBI has maximum exposure in working capital. The other lenders are IFCI, ICICI, PNB, Allahabad Bank and Union Bank of India. On March 5, lenders had a long meeting with HPL promoters, The Chatterjee Group, and state government representatives. The lenders promised all help as they were convinced about its potential. Earlier, in March 2012, a Rs 127-crore debt was converted into equity by the lenders saving HPL from moving into BIFR.