The West Bengal government, in a hurry to sell its stake in Haldia Petrochemicals (HPL), might face a legal wrangle. The Chatterjee Group (TCG), a key promoter of HPL, has filed a special leave petition (SLP) in the Supreme Court, challenging the Calcutta High Court order that barred TCG from filing a petition in the International Court of Arbitration in France.
The move by TCG Chairman Purnendu Chatterjee could spoil the government’s plan to auction its stake in HPL.
“They (TCG) filed the SLP in the Supreme Court two days ago, as the High Court division bench cleared the matter. Now, the idea of having the auction itself doesn’t stand valid,” said a TCG source in the know of the development.
The West Bengal government has about 40 per cent stake in HPL and has appointed Deloitte India to evaluate the auction process, which was expected to be completed by March 2013.
“The auction cannot take place as the decision will be awaited on the SLP in SC. All this would lead up to a really messed-up scenario and the woes of the beleaguered firm will not go away soon,” the source added. He indicated the coming board meeting, due on February 1, will be a heated one, as lenders will press the promoters to bring more funds or convert some of the debt into equity.
The Bengal firm is suffering Rs 50-60 crore of cash loss every month and it desperately needs non-interest bearing funds to the tune of Rs 1,000 crore. HPL has defaulted on its working capital loan.
In March 2012, HPL was in a similar situation and was about to be reported to BIFR, but the board then had approved conversion of a part of HPL’s loan into equity and that saved the day for HPL. Partha Bhattcahrya was the managing director of HPL during that tenure. Currently, that post is held by Sumantra Chowdhury.
Now, there is a high chance of it being forced to report to the Board for Industrial and Financial Reconstruction (BIFR). This is because its net worth, according to the latest financial statement, is around Rs 900 crore. HPL’s net worth should be more than Rs 1,200 crore to save it from reporting to BIFR. On January 14, 2013 ratings agency Icra had downgraded the company for its long-term loans.