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Despite the many issues surrounding Haldia Petrochemicals (HPL), the race for acquiring the West Bengal government's stake in it might become a close contest between public sector undertakings (PSUs).
State-run GAIL India has said it is keen on acquiring the state government's stake despite the possible legal implications. Mangalore Refinery and Petrochemicals (MRPL), a subsidiary of Oil and Natural Gas Corporation (ONGC) says it, too, would take part in the bidding, with Indian Oil Corporation (IOC).
Another major group which had earlier shown interest in HPL was Reliance Industries but it refused to comment on this. The final date to file an Expression of Interest (EoI) is June 10.
The state government has about 40 per cent stake in the company through the West Bengal Industrial Development Corporation (WBIDC) and had invited an EoI from those interested. The Chatterjee Group (TCG), the other major promoter of the company, had recently issued a newspaper advertisement, warning probable investors about the risks in the stake purchase. Both promoters were at loggerheads over a disputed 155 million shares. Even after the bidding, the first right of refusal would still be with the Purnendu Chatterjee-led TCG.
"We understand that there are legal and political problems. Still, we are keen on HPL stakes. If we are bidding for it, we would be going alone," B C Tripathi, chairman and managing director, GAIL, told Business Standard.
Asked about the TCG warning and the negative net worth of the company, MRPL Managing Director P P Upadhya said, "ONGC would be participating in the bidding, along with IOC. We are waiting for the reports that the state government is preparing. We understand there is also a case going on with the International Court of Arbitration (ICA), London. These factors, along with the negative net worth, would be taken into account before we finally go for bidding."
Deloitte has been appointed as transactional advisor for valuation of HPL's shares.
In 2011, the Supreme Court had dismissed a petition by TCG that challenged a high court verdict which set aside a Company Law Board order asking the state government to exit the project by selling its stake to TCG. However, the court did not say anything about disputed shares.
Though the disputed shares were issued to TCG in 2005 at Rs 10 each, the latter had taken a loan from WBIDC to purchase it and had pledged it to WBIDC. According to TCG, after it paid one instalment of the loan, the government stopped accepting it.
HPL also has to go for a mandatory reference to the Board for Industrial and Financial Reconstruction this year, as 50 per cent of its peak net worth has been eroded. During 2012-13, the firm reportedly made a loss of Rs 900 crore; it was around Rs 850 crore during 2011-12. A board meeting is scheduled on June 4 to look into these financial aspects.
