HPL bid may turn out to be infructuous, says IOC

The Indian Oil Corporation’s bid for the West Bengal government’s stake in Haldia Petrochemicals has been slow enough to prompt IOC spokespeople to angrily voice their concern.  Despite being the sole bidder, the delay is making a successful deal appear unlikely.

Indian Oil Corporation’s (IOC) bid for buying out West Bengal government’s stake in ailing Haldia Petrochemicals Ltd may turn out to be infructuous, a senior company official said today.

“If things continue in this fashion, then IOC’s bid may turn out to be infructuous,” the official told PTI.

He said that IOC had long back written to the WBIDC, an arm of the West Bengal government, for a discussion on the state of affairs on HPL including a dialogue with TCG, the other major promoter of the company.

“The then industry minister Partha Chatterjee had replied on the issue. But the new minister Amit Mitra had not communicated us yet,” the official said.

He said that there was need for a corrective action soon as the company was suffering losses each day, resulting the bid turning out to be null and void.

IOC emerged as the sole bidder for 675 million shares of WBIDC in HPL and quoted a price of Rs 25.10 per share way back in October 2013.

“The unusual delay is bothering us,” he said.

TCG had moved the court over the disputed 155 million shares and the Supreme Court had also allowed it to take the matter to Paris-based International Chamber of Commerce for arbitration.

Meanwhile, lenders had extended a loan of Rs 100 crore to HPL. The HPL board had also approved a rights issue amounting to Rs 1,300 crore to tide over the funds crunch.

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

http://www.business-standard.com/article/companies/hpl-bid-may-turn-out-to-be-infructuous-says-ioc-114020401339_1.html

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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

http://www.livemint.com/Companies/xtNLu4B8Jirvn1EkPoB3QK/IOC-seeks-discussion-on-Haldia-Petrochemicals-with-new-indus.html

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

http://articles.timesofindia.indiatimes.com/2013-12-15/kolkata/45215153_1_chatterjee-group-hpl-plant-naphtha

Haldia Petrochemicals’ networth erodes by 50%

The news coming out of Haldia Petrochemicals is cause for concern.  There do appear positive signs, however, that the company is prepared to find ways to turn it around.

After suffering a string of losses, the networth of Haldia Petrochemicals (HPL) has eroded by 50 percent.

After a board meeting and EGM of HPL on Friday, chairman of the company and state Industry Minister Partha Chatterjee said every step would be taken to prevent the company from going to the Board for Industrial and Financial Reconstruction (BIFR).

All the stakeholders had been informed at the EGM about the state of the company, he said.

Chatterjee also said the company might again approach the lenders for infusion of funds and added that other efforts would also be made. He, however, declined to divulge further.

The HPL board on Friday approved the appointment of UK Basu, former MD of MRPL , as the managing director of the company till March 2014. Chatterjee said that Basu had been asked to draw a roadmap for the company for a period of five years and a financial budget till next March.

About WBIDC’s stake sale in HPL to Indian Oil Corporation, the minister said that the matter was sub-judice.

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

http://www.moneycontrol.com/news/business/haldia-petrochemicals-networth-erodes-by-50_995878.html

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

http://businesstoday.intoday.in/story/bengal-govt-accepts-indian-oil-corporation-haldia-stake-bid/1/199464.html

Article: Solitary bid by IOC for Haldia Petrochemicals stake to be opened today

Despite earlier rumours of a long line of buyers for the 31% stake in Haldia Petrochemicals to be sold, more recent speculation is suggesting that it is likely that state-owned Indian Oil Corporation will be the sole bidder.

KOLKATA: The solitary bid by Indian Oil Corporation (IOC) for the 31% stake of Haldia Petrochemicals (HPL) that is on offer will be opened on Thursday and there is considerable speculation in corporate circles about the state-owned refiner’s chances of succeeding.

Mamata Banerjee had been keen on Reliance Industries Ltd (RIL) picking up the stake and the rounds of talks that the chief minister had with chairman Mukesh Ambani in Mumbai a few months back were believed to have covered this issue. However, RIL hasn’t bid for the HPL stake as both state government and RIL officials confirmed to ET on Wednesday.

Cairn India of Vedanta Group, a Gail-Oil India consortium and ONGC had earlier decided to stay out of the HPL bidding process. IOC by default is the sole bidder and it’s now for the state government to decide whether the bid will be accepted or not.

All figures are being kept under tight wraps and industry minister Partha Chatterjee told ET that he would comment only after the bids are opened and a decision taken. However, senior state government officials indicated that the reserve price is being kept at Rs 28.80 a share, which would imply that the 31% stake has a price tag of approximately Rs 1,500 crore. The officials said IOC has offered four sets of bids with varying clauses for 31, 19, 17 and 8 per share, respectively. IOC’s highest bid would fetch Rs 1,614.48 crore at Rs 31 a share, while the lowest bid would fetch Rs 416.64 crore at Rs 8 a share.

There was no official confirmation about these details from IOC.

By Sutanuka Ghosal & Debjoy Sengupta at the Economic Times.

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

http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/solitary-bid-by-ioc-for-haldia-petrochemicals-stake-to-be-opened-today/articleshow/23842713.cms

Article: RIL, IOC lead race for 31% Haldia Petrochemicals stake

The Hindustan Times is reporting on a heavyweight contest between Mukesh Ambani’s Reliance Industries Ltd and Indian Oil Corporation to secure a 31% stake in Haldia Petrochemicals Ltd held by the West Bengal Government.  RIL and IOC are widely considered to be the frontrunners in securing the deal.  Haldia specialises in ethylene and propylene; and its likely sale has drawn interest from a broad range of industry players.

A clash of titans is on the cards over the acquisition of the West Bengal government’s 31% stake in the ailing Haldia Petrochemicals Ltd (HPL). Mukesh Ambani’s Reliance Industries Ltd (RIL) and Indian Oil Corporation (IOC) are the frontrunners to buy the stake offered by the West Bengal government.

Sources said the stake is valued at between Rs. 2,000 crore and Rs. 2,700 crore and final price bids are expected in October

“We should be able to announce the winners in two to three weeks,” a senior government official told HT. “A final decision on HPL’s stake sale will, however, be taken by the group of ministers (from the West Bengal government) on HPL .”

Besides, RIL, India’s largest private sector company, and IOC, the country’s biggest commercial enterprise, ONGC, GAIL, Jindal Steel and Power, Essar Group and NRI billionaire Anil Agarwal’s Cairn India have also evinced interest in the company.

The West Bengal government holds a 39.9% stake in HPL through West Bengal Industrial Development Corporation (WBIDC), all of which was earlier put on the block.

new chapter

However, HPL’s co-promoter the Purnendu Chatterjee-led The Chatterjee Group (TCG) has staked a legal claim on a 9.18% slice of the state’s shareholding. So, the remaining 31% was offered to the bidders with the understanding that the decision on the balance disputed stake will be made after the Supreme Court’s decision.

Deloitte is the transactional advisor for HPL divestment.

TCG, which has a 41% stake in HPL, will get a month’s time to match the price of the highest bidder as it has the right of first refusal, the sources said.

The balance shares are held by Tata Motors, Tata Power and a few banks and financial institutions.

It may be recalled that TCG was ousted from the management of HPL by the West Bengal government following disputes related to management control in the mid-2000s. As the TCG group could not invest fresh funds required to run the company, the state government took over management control of HPL from TCG.

While Essar has formally announced that it is out of the HPL race, sources within ONGC and GAIL said the two companies may opt out as their proposal for a joint bid was turned down by the West Bengal government following objections from bidders like RIL. For Cairn and JSPL, sources said “it could be more of testing waters for these two companies.”

The fight over acquiring this stake in HPL may prove to be an interesting one as integrating HPL with their existing operations of refining and petrochemicals offer great synergies to both IOC and RIL. In addition, IOC also has an added advantage as it already holds an 8.89% stake in the petrochemical company.

HPL has been facing sell off and legal issues for a long time now and the lack of working capital in the company has resulted in huge accumulated issues, pegged at about Rs. 1,980 crores.

In 2012-13, HPL incurred a net loss of Rs. 907 crore on a turnover of Rs. 9,600 crore. Over 50% of its peak networth has already been eroded as of March 31, with debt topping Rs. 3,500 crore.

By Anupama Airy

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

http://www.hindustantimes.com/business-news/CorporateNews/RIL-IOC-lead-race-for-31-Haldia-Petrochemicals-stake/Article1-1123481.aspx