IOC seeks discussion on Haldia Petrochemicals with new industry minister

Sole Haldia Petrochemicals bidder Indian Oil Corp is due to meet new West Bengal industry minister ahead of the company stake’s sale.  The Indian petchem industry has grown tense over the sale, which will extend IOC’s strong position in the market.

State-owned Indian Oil Corp. Ltd. (IOC), which emerged as the sole valid bidder for West Bengal government’s stake in the troubled Haldia Petrochemicals Ltd., has sought discussion with Amit Mitra, the new industry minister of the state.

“A new minister has come. So we are hoping that he will call us for a discussion on the state of affairs,” head of IOC’s petrochemicals division S. Mitra told PTI.

Maintaining that the IOC bid is still valid, though it was submitted on 7 October, S. Mitra said the oil PSU still had the option to back out from the process if there was any violation in the terms and conditions of the share purchase agreement.

Although IOC emerged as the sole valid bidder, the other major promoter, The Chatterjee Group (TCG), moved the court instead of exercising the right of first refusal, following which the share sale process got stalled due to an order from the Calcutta high court.

TCG had contended that the controversial 155 million shares did not belong to the state government which were bundled for sale. The Calcutta high court restrained the state government from selling the shares to IOC till 21 January.

The full article is visible via the link below – Pankaj Oswal


Crisis-hit Haldia Petrochemicals plans temporary shutdown

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.

The full article is visible via the link below – Pankaj Oswal

Article: Bengal govt accepts Indian Oil bid for Haldia Petrochemicals stake

Following recent reports that only government-owned Indian Oil Corporation had submitted a bid for the WBIDC’s near 40% stake in Haldia Petrochemicals, the bid has now been accepted by the West Bengal Government.  Pending a right of refusal by The Chatterjee Group, which can match the offer, the IOC will again grow.

The West Bengal government has accepted the sole bid of state-owned Indian Oil Corporation (IOC) for WBIDC’s 39.9 per cent stake in troubled Haldia Petrochemicals (HPL).

The company’s other shareholder, Purnendu Chatterjee-led The Chatterjee Group (TCG), would be offered the right of first refusal (RoFR) for matching the IOC offer.

“After a series of meetings of the Group of Ministers (GoM) on HPL, the government decided to accept the IOC bid for WBIDC’s stake in the petrochemicals firm,” Industry Minister Partha Chatterjee said. “Consequently, TCG will be given a chance to exercise the right of first refusal.”

Although he declined to divulge the bid price and the reserve price fixed by transactional adviser Deloitte, Chatterjee said that IOC offer was higher.

He said the letter to TCG for exercising RoFR would be issued ‘as quickly as possible’. Subsequently, TCG would have 30 days time either to accept or decline the offer.

IOC emerged as the sole bidder for WBIDC’s 675 million shares in HPL although companies like Reliance Industries, Cairn India, ONGC and GAIL had expressed their interest in the company.

The oil PSU submitted its bid on Monday which was opened on Thursday.

OC’s petrochemicals group head S Mitra flew in from Delhi during the day at behest of the government. The PSU already holds 8.8 per cent in HPL.

The full article is visible via the link below – Pankaj Oswal