Haldia Petrochemicals plans temporary shutdown due to severe working capital crisis

16-Dec-13

Haldia Petrochemicals is likely to opt for a temporary shutdown from the fourth week of this month following severe working capital crisis that is resulting in a shortage of naphtha and low plant load for the last few months, as per Times Of India. It has been learnt that most of the technical officers of HPL, as well as shortlisted bidder Indian Oil, are not averse to the idea of a shutdown for a few weeks to cut down continuous losses and maintenance of the plant. The capacity of the plant is 260 tons per hour, but it is operating at 110-120 tons on average. "IOC is giving 1,000 tons naphtha per week. Not much naphtha has been lined up for the next few weeks. Besides, there has been no maintenance of the plant for the last 18 months," said sources. Sources pointed out that HPL is losing Rs 2-2.5 crore every day due to low-capacity operation. The firm had an accumulated loss of Rs 2,500 crore till March 2013. From April to October, 2013, HPL has posted a loss of Rs 521 crore taking the accumulated losses to over Rs 3,000 crore. The net worth of HPL has already eroded by Rs 50 crore. If the losses continue, then the company will have to go to BIFR. HPL board will meet on December 17 for discussing the future course of action following the Supreme Court verdict that has allowed the Chatterjee Group to move to International Court in Paris for arbitration regarding the disputed 15.5 crore shares. This block constitutes 9.22% equity stake of the company and holds the key for management control.