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HPL to prepare a total package for revival

With uncertainty still looming over the equity participation of Indian Oil Corporation in the Haldia Petrochemicals Limited, the management of the company on Friday said a 'total package' is being worked out for its revival involving existing players.

The fate of the Rs 51.70 billion project was discussed in detail at a marathon Board meeting of the company here in which all the players - The West Bengal Government, The Chatterjee Group and the Tata Sons - participated to find a way out of the impasse.

"A total package is being planned for revival of the company involving usual players," HPL chairman Tapan Mitra said after the board meeting lasting nearly four hours.

Mitra, however, was evasive on various issues facing the project and simply said, "We had a very good meeting and managed to resolve all problems," he said.

He also refused to comment on whether the IOC's participation in the company was discussed during the meeting.

HPL, which had started commercial production only on August 1, 2001, was reeling under extremely adverse debt-equity ratio and was in urgent need of funds infusion to retire high-cost debts.

Mitra also avoided any mention of whether the meeting discussed Tata's continuance in the company.

Tata Sons chairman Ratan Tata had told Telco's AGM earlier this month that they would like to get out of HPL as it did not fit into their core business and had subsequently met Chief Minister Budhadeb Bhattacharya raising doubts over Tatas' continued participation in the project.

Tata representative on HPL board Feroze Vandrewala, also remained non-committal on the issue after the Board meeting and only said, "there was no talk over Tata's stakes in HPL during the meeting."

The chairman of the Chatterjee Group, Purnendu Chatterjee, 43 per cent stakeholder in HPL, said, "It was a good meeting. We are working together to put HPL on a strong position."

He, however, said that the problems faced by the project would be over in 45 days and the plant will be back on rail.

IDBI nominee on HPL board H K Khan said, "The management will submit a proposal for restructuring the company's debts. We are confident that the company will do well."

Asked whether IDBI will consider reduction in interest rates to bail the company out, Khan said no decision on lowering of interest rates on loans extended to HPL had so far been taken.

Incidentally, IDBI had huge exposure of about Rs 9 billion in HPL and it was one of the largest lenders to the project.

The project has only Rs 10.10 billion of equity contribution from the three promoters till date with the total debt running to more than Rs 40 billion.

The problem for the highly ambitious project started after it could not raise any fund from the market through a public issue due to depressed market conditions and thus a search for a fourth partner started.

The negotiations with IOC in this regard has already made substantial progress and the public sector giant has undertaken a feasibility study through leading consultant, KPMG.

But a final decision in this regard is still awaited.

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