SBI to raise foreign currency loans to the tune of US$ 300 million for HPL

01-Jun-05

State Bank of India has agreed to raise US$300 million foreign currency loans for Haldia Petrochemicals Limited (HPL), for investment in Basell Polyolefins. The money is to be raised through the external commercial borrowing rout. The international market can be a source of big funds compared to the domestic market and companies can raise large sums at competitive prices depending on the risk perception of the international market through the ECB route. The ECB route will have its benefits for HPL as it provides foreign currency funds that may not be available in India. Many times, the cost of funds works out to be cheaper when compared with rupee funds. HPL's current status as a shareholder in Basell remains unclear. The Bengal government is not in favour of HPL investing in Basell as they feel the company has just registered a profit and is not in a position to become an equity partner in Basell by raising loans. HPL's participation in Basell is dependent on how fast Purnendu Chatterjee buys out the West Bengal state's stake in the company. Chatterjee feels that if HPL becomes an equity partner of Basell it will be able to access the technologies of the Dutch company.