Board to take a call on HPL's financial fate today

In dire need of funds, HPL might go to the Board for Industrial and Financial Reconstruction

A group of ministers met at the state secretariat on Monday to discuss how to avert a financial crisis at Haldia Petrochemicals Ltd (HPL). The board meeting slated for Tuesday will come to a final decision on the matter.

West Bengal Industries Minister Partha Chatterjee, also HPL chairman, declined to comment on the Monday meeting. Trinamool Congress leaders Manish Gupta, Subrata Mukherjee and Amit Mitra are part of the group on HPL. Chief Minister Mamata Banerjee also enquired about the meeting, sources said.

Coming up with a rights issue for the company is also an option but likely opposition to it from Purnendu Chatterjee’s The Chatterjee Group (TCG), a promoter, is making the management reluctant. In dire need of funds, HPL is likely to take go to the Board for Industrial and Financial Reconstruction. An option at the moment is converting the company’s Rs 128-crore debt into equity. It has earlier converted debt of Rs 127 crore into equity.

Lenders to the company — State Bank of India, Punjab National Bank and IDBI Bank — had earlier suggested converting the debt into equity but the management had rejected the proposal. They are also pitching for a rights issue.

The HPL plant has been running at 50-60 per cent of its total capacity for the past few weeks for want of funds, resulting into further losses. The company has been asking the lenders for working capital of around Rs 1,000 crore but a legal battle between the promoters (West Bengal Industrial Development Corporation or WBIDC is the other promoter) is keeping banks from infusing funds.

A recent Supreme Court order allowed TCG to approach the International Court of Arbitration in Paris, a blow to the state government’s plan to divest stake in HPL. The government has selected state-owned Indian Oil Corporation has been selected as the bidder for disputed 155 million shares, part of auctioned shares. The state holds 40 per cent stake in HPL through WBIDC, which is on the block.