RIL expresses interest in acquiring controlling interest in Haldia Petrochemicals

04-Oct-11

India’s largest petrochem maker- Reliance Industries has expressed interest in acquiring a controlling interest in loss-making Haldia Petrochemicals, ready to make a competitive bid when the West Bengal government decides to put its stake for sale, as per telegraphindia. This week, the Supreme Court has settled the ownership of 15.5 crore shares reinforcing the state government’s position as the single largest shareholder in HPL. RIL awaits clarity on the stake sale issue. If there is a possibility of a third party being allowed to participate, RIL is keen to bid. The state had made an offer in 2005 to Purnendu Chatterjee, (holding 42.72% stake in the project), who at that time flinched because of the price. The stake sale process will depend on the valuation of Haldia Petro and the Bengal government’s resolve to extract the best possible price through a transparent process. Industry observers believe that a competitive bidding process is the best possible option. Since Chatterjee has the first right of refusal, he would be asked to close the deal at the highest bid price. He will have to shell out funds for the entire 52 crore shares that the state government holds. If he fails to do so, the state government would be within its rights to sell its shares to the highest bidder. Another runner in the race could be IOC. IOC is in a favourable spot since it already holds a 9.62% stake in HPL. It would also be politically convenient for the state to sell its stake to a public sector company. However, IOC could face a problem with funds, since it posted a loss of Rs 3,719 crore in Q1 (April-June) on revenues of Rs 99,757 crore. In comparison, RIL is sitting on a huge cash pile of US$17.4 bln (roughly Rs 87,000 crore).