Who is the majority stakeholder in HPL - West Bengal Government or TCG?

12-Aug-05

Last week saw the CLB pass an interim order restraining the government from issuing fresh shares to domestic financial institutions on the ground that this would turn TCG's holding in HPL into a minority stake. However, CLB chairman S. Balasubramanian did not stay the allocation of HPL shares to IOC on the ground that TCG would continue to hold a majority 53% stake in HPL. But the issue regarding stake holding remains ambiguous. The Chatterjee Group (TCG) claims to be the majority stakeholder in Haldia Petrochemicals (HPL). This is based on the calculation, under which the state government is to hand over shares worth Rs 155 crore to TCG, as per an agreement signed on January 12, 2002. This amount was to be paid over a 15-year period, after which, shares would be transferred to TCG making it the majority shareholder. Sources claim that since TCG went back on a July 31 payment deadline, the share transfer has not taken place- therefore, its claim that it holds/held a majority stake was clearly unsustainable. TCG and its associate companies like Chatterjee Petrochem (Mauritius) Company, India Trade (Mauritius) and Winstar India Investment Company together hold shares worth just Rs 690 crore. The state government, with the support of the Tatas and Indian Oil (IOC) has a larger chunk of HPL shareholding. The three together hold 55.79% stake in HPL worth Rs 870 crore. Even without the IOC stake of 7.5% valued at Rs 150 crore, the other two partners have a larger stake in the company than TCG and its associates. The other objection raised by TCG is that Chatterjee was asked to pay close to Rs 30 per share, while IOC has been offered the shares at Rs 10. By offering the shares to IOC at the face value of Rs 10, HPL would stand to lose Rs 300 crore. However, under the CDR package, the financial institutions are allowed to swap debt to equity at par. IOC was offered shares according to the corporate debt restructuring package, in a manner similar to the offer of Rs10 per share to Winstar India Investment Company Ltd - an entity that Purnendu had roped in last year to meet the CDR commitment. The next hearing scheduled for September 27 and 28, the state government will raise these points