West Bengal government on Thursday decided to sell its 39.99% stake in Haldia Petrochemicals (HPL) to Indian Oil Corporation (IOC), paving the way for a turnaround in the fortunes of the beleaguered plant that has run up losses of Rs3,200 crore and a debt burden of Rs4,000 crore till date.
The sale, however, can get through only if Purnendu Chatterjee, who owns 41% stake in HPL and has the right of first refusal, fails to match the price bid by IOC.
Chatterjee, who co-promoted HPL, had earlier approached Calcutta High Court to stall the sale process claiming that the shares put up for sale include 15.5 crore shares having disputed ownership. The court ruled that the government would have to seek its permission before transferring this block.
The state government on Thursday scuttled rumours that Reliance Industries had also bid for the stake in HPL during an auction process earlier called by the state government through consultant Deloitte.
‘’We have informed IOC that their bid was the only one to be found acceptable,” state industry minister Partha Chatterjee said after a meeting of a group of ministers held to clear the bid.
While the bid price wasn’t disclosed by the state citing confidentiality pact, the minister said it is much more than what has been decided by Deloitte as the reserve price.
The reserve price for 67.5 crore shares on offer is about Rs3.80 a share on a face value of Rs10 a share, dna has learnt, valuing the stake on offer at just Rs256.50 crore.
The Chatterjee Group is likely to match IOC’s bid if it is very close to the reserve price, sources said.
But if that doesn’t happen, IOC, which already owns 9% holding, would emerge as the majority owner, and help HPL turn around as it would ensure availability of naphtha, a key raw material derived from crude oil
In fact, the central government had earlier granted HPL a custom duty waiver to the extent of 5% on import of naphtha as a special case to tide over its financial crisis.
Despite such difficulties, Haldia controls about 22% of the country’s petrochemicals industry and its market share is a high 60% in the eastern region, where it is the only integrated producer.