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Corporate - Restructuring


Haldia Petro gearing up to post profit with CDR plan ready

Indrani Dutta

Kolkata Feb. 16

THE loss-making Haldia Petrochemicals Ltd (HPL) is now gearing itself up to enter the net profit zone with the corporate debt restructuring (CDR) plan firmly in place. The details of the plan, which was finalised by the CDR cell on January 22, has just been circulated among all the lenders.

Sources said that interest payment relief is estimated at Rs 100 crore per annum of which Rs 80 crore would be on account of reduced interest rates and the remaining on account of the proposed loan-equity conversion.

The company now has an annual debt service burden of Rs 540 crore. It has been making losses ever since it was commissioned in 2000.

But, the HPL officials are tight-lipped about the initiatives being launched to achieve a net profit position in 2003-04. An initial public offering (IPO) is scheduled for May, and the company's profitability becomes a crucial issue.

As per the CDR, HPL's interest rate on its rupee loans (of about Rs 2,000 crores) has been pegged at 10.5 per cent against 14 per cent paid by it on an average. It has been decided that Rs 140 crore would be converted into equity by the banks and FIs, which has fixed April 1, 2003 as the cut-off date for the lowered interest structure to come into play. However, the conversion might not be possible before the end of next month, the sources said.

There would be a fresh equity infusion of Rs 600 crore, of which Rs 332 crore would come from GAIL (India) Ltd with the remaining amount coming through either a public issue or through a mix of IPO and infusion by Mr Purnendu Chatterjee of Chatterjee Petrochem (Mauritius). Post-restructuring, HPL's paid-up capital is slated to increase to Rs 2,000 crore from Rs 1,153 crore now.

Long showcased as the icon of West Bengal's industrial resurgence, HPL had its original cost pegged at Rs 5,170 crore. It later increased the same to Rs 5,900 crore, with the inclusion of finance costs as well as the cost of some additional assets not included in the original estimates.

However although considered to be operationally viable with its earnings before interest, depreciation and tax (EBDIT) touching Rs 307 crore in 2002-03, the huge burden of unplanned borrowings resulted in a sagging bottomline with net losses of Rs 500 crore in 2002-03, when net turnover stood at Rs 2,500 crore. Its accumulated losses were about Rs 1,000 crore and total borrowings stood at Rs 4,200 crore.

Indications are that HPL's net sales might be of the order of Rs 3,300 crore before the end of the current fiscal. This is expected to be both on the strength of a larger sales volume as well as good prices.

The company has had an average EBDIT of Rs 60 crore and it is confident of incurring Rs 600 crore in 2003-04.

HPL, which has a naphtha capacity of 4.66 tpa, has a product mix of polymers and speciality chemicals.

Sources said that the CDR cell has not touched the area of foreign loans. The company has $75-million borrowing from ANZ Grindlays, London, and State Bank of India, London, besides Bank of Baroda, Bahamas. It had also borrowed from Exim Bank of Japan.

More Stories on : Restructuring | Petrochemicals

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