Saldanha To Continue As Hpl Honcho

Richard B Saldanha, managing director (MD) of Haldia Petrochemical (HPL), has decided to continue in the top slot of the company, putting end to months of speculation over his proposed departure from West Bengal's most ambitious project as one of the principal promoters, The Chatterjee Group (TCG) set to get management control of the company.

The decision to continue as the MD of this financially troubled company has been facilitated by the new agreements between the three promoters of HPL, TCG, government of West Bengal (GoWB) and the Tata Sons last Saturday. By this arrangement the government has agreed to buy out Tata's 14 per cent share and give 8 per cent of it to TCG while retaining the rest 6 per cent.

 

Saldanha's move will stabilise HPL operations at this critical juncture. The management will now be under intense pressure to chalk out a complete restructuring package within very short span of time and his presence would be big boost for the company.

It was learnt that Saldanha was disturbed with the protracted battle among the promoters over issues of management control and bringing in fourth equity partner as strategic investor. Now that the promoters have buried their hatchet with TCG wresting majority share (51 per cent) from GoWB, things are expected to fall in place within this quarter.

TCG has now got the mandate to restructure over Rs 4000 crore high cost borrowings and find an equity partner. It will also infuse Rs 107 crore as advance against equity proposed earlier, easing the working capital need of HPL for the time being.

With this development, the HPL board will also witness some changes with two Tata nominees going out. At present five nominees from GoWB balance out five from TCG in the board. Apart from that there are two nominees from the Tata Sons and four from the financial institutions. Now the balance is expected to shift towards TCG and induction of more executive members can not be ruled out as well. Currently, Saldanha is the only executive member among 16 member board.

The development will also mean more options are open as fourth equity promoter in HPL than Indian Oil Corporation (IOC). TCG has reported to have made presentations to number of companies including Totalfina-Elf for this.

The squabble among existing promoters over mode of equity and debt restructuring weaken the company considerably and it seriously threatened operational performance of HPL.

The company frozed all non-mission critical payments to technology contractors like Shell, ABB Lummus, Mitsubishi, Bechtel worth Rs 900 crores. Moreover, it defaulted number of times for payments to IOC over naphtha procurement and the later stopped supplying the feedstock to HPL.