Bankers refuse to bail out Haldia Petro with more funds

Firm is suffering Rs 50-60 crore of cash loss every month; state govt unlikely to help

Haldia Petrochemicals Ltd (HPL), once a showcase project of the West Bengal government and now a troubled joint venture, is in for a major crisis as bankers have denied its promoters’ demand to lend further capital to the venture without turning the existing debt into equity.

Purnendu Chatterjee, a major shareholder of HPL, is also not ready to infuse any funds without getting management control.

Sumantra Chowdhury, managing director of HPL, confirmed this. Speaking to Business Standard, he said: “The bankers have denied us cash and so have the promoters. So, we are somehow running the plant at 60 per cent. The future is uncertain.”

HPL Chairman Partha Chatterjee, who prefers to keep the plant running even at the cost of making losses, has now approached the state government to infuse Rs 100 crore immediately. The state government has a 40 per cent stake in HPL.

“We have asked around Rs 100 crore from state’s fund and are hopeful to get it. Bankers have denied us further working capital loan. To make sure that the plant is running, we have to inject this capital at the earliest,” he said.

However, since the West Bengal government itself has been longing for funds from the Centre, it looks unlikely that Chief Minister Mamata Banerjee will oblige.

The Bengal firm is suffering Rs 50-60 crore of cash loss every month and it is in desperate need for non-interest bearing funds to the tune of Rs 1,000 crore. HPL has defaulted on working capital loan.

One of the major reasons that the bankers have not extended any fresh working capital, is that the state government is not allowing bankers to turn their debt into equity. The State Bank of India and IDBI Bank are the leading bankers of the troubled joint venture between the state government and the Purnendu Chatterjee-led The Chatterjee Group (TCG).

When contacted, one of the bankers of HPL also confirmed the decision by banks. According to him, there has been no progress since the last meeting between lenders and HPL management in Mumbai. In the meeting, lenders had set a number of terms and conditions but HPL did not respond positively, the banker added.

The woes don't end here. According to the chairman, Purnendu Chatterjee is not ready to infuse funds until he is given the management control. “He is ready to give Rs 500 crore, but not without getting the management control. Bankers have also asked him on this issue. But despite that, TCG is not ready to infuse any capital,” he added.

Meanwhile, the share evaluation process for selling Bengal government's share in HPL is on and is expected to be completed by March. However, TCG sources said that no one is showing much interest in the state’s shares.

“Earnings per share of the company is minus Rs 5. The arbitration case is another legal wrangle that the government has to go through. Till a decision is reached, the auction cannot take place,” TCG sources added.