Severe financial crunch forces Haldia Petrochemicals to halve production

26-Sep-12

A severe financial crunch that led to shortage of feedstock naphtha has forced Haldia Petrochemicals Ltd (HPL) to reduced production by half, as per The Telegraph. A decision was taken to produce at 125 tons/hour capacity, from 190 tons/hour capacity in the last few days. The full capacity of the plant is around 250 tons/hour. In June, HPL was s operating at 60% capacity because of the credit crunch. The company raised production to 80% in July after receiving a Rs 200-crore working capital loan from banks. It further increased output to 90% in August. However, HPL officials were not hopeful of sustaining it without further support from banks. HPL has sought Rs 600 crore of term loan and Rs 400 crore of working capital loan. However, lenders are wary of giving more unless the warring promoters ' the Bengal government and The Chatterjee Group ' bring in equity. Lenders have asked the state government, in control of the HPL management, to bring in a strategic investor such as Indian Oil Corporation. The state government has set up a four-member committee comprising industry minister and HPL chairman Partha Chatterjee, power minister Manish Gupta, panchayat minister Subrata Mukherjee and state finance minister Amit Mitra, who is heading the panel. The mandate before the GoM (group of ministers) is to find out a way for the government to exit HPL. This development has shortened the time for the government to come up with a sustainable plan to revive the company. HPL will hold its annual general meeting tomorrow.