GAIL to save Haldia via Rs 332 crore infusion

Indian Oil Corporation (IOC) was excluded from the restructuring process of Haldia Petrochemicals Ltd (HPL) after a meeting of the company's corporate debt restructuring (CDR) cell asked the promoters to infuse Rs 600 crore into HPL.

GAIL Ltd is expected to bring in Rs 332 crore. The balance Rs 268 crore will have to be brought in by The Chatterjee Group (TCG), co-promoter in the company with the government of West Bengal. The state , however, contended that the IOC proposal would be taken up only after the CDR process was over.

"The government has told IOC that its offer will be considered after debt restructuring package is ready by the financial institutions. Involving it now would delay the CDR process which we do not want," Nirupam Sen, industry minister, GoWB, said.

IOC had submitted a package to the government of West Bengal (GoWB) in December 2003 which involved investment up to Rs 700 crore as equity in HPL.

It also talked about whole host of downstream projects which include expansion of polypropylene, polyethylene and cracker units of HPL apart from setting up new styrene, synthetic rubber and condensate unit with total investment of Rs 5,000 crore.

The understanding from the navaratna PSU was that it should be included in the CDR process. IOC has threatened to withdraw its Rs 5,000 crore proposal for development of chemical downstream industry at the port town of Haldia in West Bengal.

FIs has decided to convert part of HPL's Rs 4,500 crore debt to equity. Sources said the conversion will be in the region of Rs 100 crore. Earlier, GAIL had offered Rs 200 crore. Subsequently, it raised the offer by another Rs 132 crore.

TCG, on its part, sought permission to float an initial public offer (IPO) to raise its part of the cash. It has agreed to underwrite the entire issue.

Simultaneously, it has decided to seek permission of the finance ministry to convert its high cost borrowing with cheaper foreign currency loan through ECB route. Post conversion, the equity capital will come close to Rs 2,000 crore, Sen informed.

On its part, FIs also decided not to write down the equity of HPL. It brought down the average interest rate from 14.5 per cent to around 10.5 per cent.

HPL had an accumulated loss of Rs 1,057 crore at the close of fiscal 2003, due to high interest cost. The company went commercial in August 2001.

However, company was hoping to achieve EBDIT of Rs 600 crore for 2003-4. Last year, it was in the range of around Rs 300. The company is expecting to post turnover of Rs 3,600 crore this year.