IOC may scrap bid if Purnendu Chatterjee gets HPL control

Says it makes no sense to go forward with bid if it does not get management control

IndianOil Corporation might not proceed with its planned acquisition of the West Bengal government’s 40 per cent stake in Haldia Petrochemicals Ltd (HPL) if The Chatterjee Group chief Purnendu Chatterjee was appointed HPL chairman, people privy to the matter told Business Standard.

IOC had emerged the sole valid bidder for the state government’s stake in HPL, in which TCG is a key private promoter. TCG has been at loggerheads with the state government to secure management control in HPL.

“We came out as a valid bidder and our intent is to gain management control in HPL. If that is not achieved, it hardly makes sense to go forward with our bid,” a senior IOC official said, on condition of anonymity. The official added the oil marketer was awaiting a formal communication on the matter from the West Bengal government. “So far, it has been a test of patience,” he said. The top post at HPL has been vacant after Partha Chatterjee resigned as chairman in December 2013, following a reshuffle in the Bengal cabinet. IOC owns nine per cent stake in HPL; acquiring the state government’s stake will raise its holding to 50 per cent. IOC does not have a board seat in HPL.

Sources said giving Chatterjee the post of chairman was vital for fund infusion into the company. “This is the key condition (Chatterjee’s appointment as HPL chairman) for the financial restructuring of the company. Due to the code of conduct ahead of the coming polls, the announcement is being kept on hold,” said a source. At a meeting with promoters, bankers had favoured the appointment of Chatterjee as HPL chairman, as this might prevent HPL from approaching the BIFR (Board for Industrial and Financial Reconstruction).

HPL’s net worth has been eroded due to continuous losses. It has been struggling to secure adequate naphtha to run the plant at full capacity.

After Partha Chatterjee quit as chairman, HPL’s approved Rs  1,300-crore rights issue lost its way. So far, there has been no word on the matter from promoters.

THE HPL SAGA CONTINUES

* IOC had emerged the sole valid bidder for the state government’s stake in HPL, in which TCG is a key private promoter

* TCG has been at loggerheads with the state government to secure management control in HPL

* HPL’s net worth has been eroded due to continuous losses. It has been struggling to secure adequate naphtha to run the plant at full capacity