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IOC to get Haldia Petro reins with 26 pc stake

Our Bureau

KOLKATA, March 26

THE board of Haldia Petrochemicals Ltd has approved the entry of Indian Oil Corporation (IOC) with management control, bringing the curtains down on one aspect of the nearly two-year-old corporate drama.

Mr Tarun Das, HPL Chairman, told presspersons after the board meeting on Tuesday: "We have agreed to IOC taking up 26 per cent stake in the company with management control." Today's meeting was attended by most of the members barring representatives of the Tata group which has expressed a wish to exit as it was not part of its core business.

Representatives of LIC, IFCI and the State Finance Department were also absent. The West Bengal Government (through the West Bengal Industrial Development Corporation) and Chatterjee Petrochem (Mauritius) have a 43 per cent share each in HPL, with the Tatas holding the remaining 14 per cent.

Information available with Business Line suggests that today's decision was the outcome of several rounds of hectic parleys in New Delhi over the last 48 hours or so, involving the HPL promoters, Indian Oil top brass and Mr Tarun Das. "The Ministry people were also involved and Mr Das played a key role in all this," sources said.

The IOC Chairman had recently stated in Mumbai that renegotiations had begun between HPL and IOC. The outgoing chairman reiterated this at a joint press meet with the Chairman-designate in New Delhi today.

IOC, which made its first offer last year after the completion of the study by its consultants KPMG PeatMarwick, had extended its offer at least twice. However, until now there had been little progress primarily due to the conditions set by IOC.

Today's HPL board decision is a pointer to the change in the attitude of the company's key promoter, Mr Purnendu Chatterjee, who is on record as saying that "although IOC was a very lucrative partner, its proposal on a possible entry was a difficult one for all the three promoters of HPL". Mr Chatterjee said this while talking to the press after the HPL annual general meeting on September 27, 2001. Asked for his comments today, Mr Chatterjee, who is Deputy Chairman of HPL, said he was "of course happy" with the board decision.

The West Bengal Government, which had agreed earlier this year to hand over majority control to Mr Chatterjee had, however, always been in favour of roping in the oil major to revive the debt-ridden company. With a debt burden of more than Rs 3,500 crore, HPL — West Bengal's icon of industrial resurgence — is today hovering on the brink of financial collapse. Its debt-equity ratio is now around 4:1 instead of the projected 1.6:1 although operationally it has done well for itself with good sales realisation.

As things stand today, the HPL board has agreed to accept two of IOC's major conditions — management control and 100 per cent naphtha supply on a preferred-client basis.

HPL board sources told Business Line that the company was now trying for an extended credit arrangement for getting its supplies on a competitive pricing basis. At 100 per cent capacity utilisation, HPL needs 4,000 tonnes of naphtha daily, involving an expenditure of around Rs 50 lakh per day. It has asked IOC for an enhancement of its credit limit from Rs 300 crore now to Rs 400 crore.

Dr G. Goswami, IDBI representative on the board, said that IOC was likely to bring in Rs 460 crore as equity and a fresh debt recast proposal would be worked out now and be submitted by April.

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