Haldia Petrochemicals stares at loss in first quarter

KOLKATA: Haldia Petrochemicals (HPL), the showpiece of Bengal industrialization, continues to bleed even though the process of a truce between two promoters, Purnendu Chatterjee and the state government, to save the petrochem firm is reaching its final stage.
HPL is likely to post a loss of Rs 75 crore in the end of first quarter of this fiscal which would erode its net worth to some extent that was restored through a financial restructuring recently.Besides, HPL has to service the loans by the end of June so that it does not become a non-performing asset. Lenders led by SBI and IDBI are working on possible solutions so that HPL does not become an NPA, but it requires permission from the Reserve Bank of India (RBI).
Meanwhile, sources close to the development said that Indian Oil, the sole bidder for the government's stake in HPL, may not pursue it any longer following a change in the management. The entire board of IOC would be changed by September this year. IOC chairman R S Butola, who was keen on HPL, retired last month. Now, director R&D of IOC, R K Malhotra, is officiating as chairman and he too will retire soon. M K Sinha, the director of business development and planning who has been involved in the dialogue between the state government and HPL management for the last one year, will also retire in July. "It would be difficult for IOC to pursue about HPL as the entire management will be new," added sources.
However, an oil industry expert said that without a backward integration with a refinery it would be difficult for HPL to survive. "It is not possible for a standalone refinery to survive in such a situation. It needs tie-up with giants like IOC or Reliance Industries," added sources.
In order to come out of the purview of BIFR, HPL has transferred real estate under Haldia Real Estate Ltd (HREL) to Haldia Cracker Complex Ltd at the current market value which has turned HPL net worth positive.
Both HREL and HCCL are wholly-owned subsidiaries of HPL. HREL has 221 acres outside the HPL plant complex. HPL bought the land for Rs 7 crore but now the value of the asset has appreciated many fold. HREL has a paid-up equity of Rs 17.50 crore. So, effectively, the land now is valued at that price. However, the current value of land is over Rs 200 crore. "There was only a book transfer at the enhanced value which has turned HPL's book positive," said sources.
The petrochem firm has Rs 1,700-crore term loan and Rs 2,000-crore working capital loan. The major term loan lender is IDBI Bank, while SBI has maximum exposure in working capital. The other lenders are IFCI, ICICI Bank, PNB, Allahabad Bank and Union Bank of India.