BUSINESS
Reliance Industries (RIL) is likely to emerge as the most aggressive bidder and the frontrunner in the race to acquire West Bengal government’s 31% stake in Haldia Petrochemicals, which has been put up for sale.
RIL, Mukesh Ambani’s flagship, is the most cash-rich and has the biggest appetite for growth and investments among the players which have responded to the invitation for expression of interest floated by the West Bengal government, which co-promoted Haldia Petrochemicals, along with The Chatterjee Group. Oil and Natural Gas Corp, Indian Oil, GAIL, Cairn India and Jindal Steel & Power are among the other players in the fray.
To be sure, Haldia Petrochem is the key competitor of RIL.
Despite its losses and high debt, Haldia still controls the eastern Indian market for many of the petro-derivates that both companies churn out. It controls about 22% of the country’s petrochemicals industry and as high as 60% in the eastern region, where it is the only integrated producer.
Additionally, Haldia enjoys a customs duty waiver of 5% on import of naphtha, a key raw material, granted to it as a special case by the government to tide over its financial crisis.
“All these factors make Haldia Petrochem an attractive proposition for Reliance,” a state government insider said.
A change to acquire substantial stake in its key competitor in the petrochemical sector comes at a time when Reliance is embarking on its “largest investment programme in history” as articulated by Mukesh Ambani at last week’s annual general meeting, where he detailed investments worth Rs 1.5 lakh crore in its core businesses including petrochemicals, oil and gas.
dna had earlier reported how the Mamata Banerjee-led West Bengal government has been exploring ways of bringing in either Reliance or Indian Oil as a new partner and that Reliance had even made an unofficial offer price for the government’s 39% stake, which was opposed by partner Purnendu Chatterjee.
Chatterjee is still opposed to the process of stake sale by the state government through a formal auction process and had come out with a public warning to the prospective bidder claiming that the shares put up for sale by the state include 67.5 crore dispute shares.
Chatterjee subsequently approached the Calcutta High Court, which told the state government to keep aside the dispute shares and continue with the remaining 31% stake sale.
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