The problems for Haldia Petrochemicals continue to mount, this time due to a working capital shortfall. According to industry sources, Haldia could complete a temporary shutdown for a week later in the month to save on other business costs. The crisis has negatively impacted naphtha production and has resulted in a low plant load in the recent months.
KOLKATA: Haldia Petrochemicals is likely to opt for a temporary shutdown from the fourth week of this month following severe working capital crisis that is resulting in a shortage of naphtha and low plant load for the last few months.
It has been learnt that most of the technical officers of HPL, as well as shortlisted bidder Indian Oil, are not averse to the idea of a shutdown for a few weeks to cut down continuous losses and maintenance of the plant. HPL board will meet on December 17 for discussing the future course of action following the Supreme Court verdict that has allowed the Chatterjee Group to move to International Court in Paris for arbitration regarding the disputed 15.5 crore shares. This block constitutes 9.22% equity stake of the company and holds the key for management control.
HPL chairman Partha Chatterjee could not be contacted for comment, but managing director U K Basu said that there is no plan for a shutdown as of now.
According to sources, the HPL plant is now operating in less than 50% capacity which could be dangerous for the plant in the long run. The capacity of the plant is 260 tonnes per hour, but it is operating at 110-120 tonnes on average. “IOC is giving 1,000 tonnes naphtha per week. Not much naphtha has been lined up for the next few weeks. Besides, there has been no maintenance of the plant for the last 18 months,” said sources.
Sources pointed out that HPL is losing Rs 2-2.5 crore every day due to low-capacity operation. They said detonating financial condition is also forcing HPL to sell its products at discounts to realize funds quickly as the company could not hold inventory for long. “It is selling product without almost any margin forcing other petrochem players also to undercut price. This is not good for HPL as well as for the industry as a whole. IOC, the new owner in waiting, is also not happy with this as it is also facing the heat of price undercutting. If it continues for long, then HPL’s financial health will be beyond redemption,” alerted sources.
The firm had an accumulated loss of Rs 2,500 crore till March 2013. From April to October, 2013, HPL has posted a loss of Rs 521 crore taking the accumulated losses to over Rs 3,000 crore. The net worth of HPL has already eroded by Rs 50 crore. If the losses continue, then the company will have to go to BIFR.
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