Comments
Having fought bitterly for the control of ailing Haldia Petrochemicals Ltd (HPL), the lead promoters, the West Bengal Government and The Chatterjee Group (TCG), are finally walking the reconciliation path.
Sources told Business Line the State Government may now agree to sell half of its undisputed 31 per cent stake (520 million shares) in the project to Purnendu Chatterjee-led TCG at the auction-derived price of ₹25.10 a share (of ₹10 face value each), totalling ₹652.6 crore.
This would raise Chatterjee’s holding in the company to 55 per cent. He now has a 41 per cent stake in HPL.
The share price was derived through an auction held in October 2013. IndianOil Corporation, which holds a 9 per cent stake in the project, was the lone bidder for the 67.5 crore shares put on the block by the State Government. The offering included 15.5 crore (9 per cent) of disputed shares.
Fiscal incentiveWhile both Chatterjee and State Industry Minister Amit Mitra were not available for comments, sources said as part of the deal, the State Government proposes to offer ₹3,000-crore unutilised benefits of a sales tax remission scheme.
According to the scheme, new industrial units are allowed to retain sales tax collection, equivalent to the amount of investment they made, spanning over 12 years. The fiscal incentives will help the proposed TCG-led HPL management approach banks for debt recast and new loans.
The sales tax scheme, however, would not be applicable on motor spirit (petrol) production of the company as a case in this regard is awaiting verdict of the Calcutta High Court.
The fate of the 15.5 crore disputed shares is also left to international arbitration.
In December 2013, the Supreme Court rejected an appeal from the State Government for preventing TCG from approaching the International Court of Arbitration in Paris.
Major LoopholesThe proposed deal is not free from loopholes.
According to the norms of the bidding held in October, Chatterjee had a first right of refusal over the shares. But the offer was slated to be time barred.
The price was derived on the basis of the State’s promise to offload 67.5 crore shares, not less than that. Besides, the State Government is yet to communicate about the fate of the auction to IndianOil.
The State-owned refiner, therefore, has sufficient ground to be aggrieved. To get the deal through, the West Bengal Government (and TCG) has to take IOC and the Union Government into confidence, say sources.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.