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Bengal seal on HPL stake auction

Calcutta, Oct. 13: The group of ministers (GoM) set up to decide the fate of beleaguered Haldia Petrochemicals Ltd (HPL) has recommended selling the government’s stake in the company through an auction.

The GoM is headed by Bengal finance minister Amit Mitra, while industries minister and HPL chairman Partha Chatterjee, power minster Manish Gupta and panchayat minister Subrata Mukherjee are the other members. The group submitted the report to chief minister Mamata Banerjee two days back.

The GoM, which was constituted by Banerjee a month ago, also decided to honour the first right of refusal of The Chatterjee Group in case of sale of the government’s share.

Sources said the chief minister’s approval would come in the form of an order to the West Bengal Industrial Development Corporation (WBIDC) which owns the HPL shares for the Bengal government.

Following the government’s order, the WBIDC board will kick off the process of divesting its 39.99 per cent stake, which is worth nearly Rs 700 crore at a face value of Rs 10.

It has also been decided that a monitoring committee, which will include food processing secretary C.M. Bachhawat and industry secretary Alapan Bandopadhyay among others, will be set up to oversee the sale process.

The GoM report was discussed at the cabinet’s industry sub-committee meeting today. Industries minister Partha Chatterjee declined to comment on the report.

Incidentally, Chatterjee had told The Telegraph on December 6, 2011 that the government would auction its shares after the Supreme Court declined to allow The Chatterjee Group (TCG) to gain control of HPL. The GoM’s decision now has put an official stamp on it.

However, there is a possibility that TCG, which holds 40.87 per cent, may challenge the government’s decision. It has already voiced its displeasure about the auction process.

According to the GoM’s suggestion, The Chatterjee Group will be given an opportunity to match the highest price derived through an auction.

If TCG declines to do so, the highest bidder will get the shares. In case it agrees to match, TCG will walk away with WBIDC’s share.

TCG has already objected to this process of finding out the “best value” of WBIDC’s share. It was of the opinion that the valuation of the government’s share can be done by a valuer mutually selected by TCG and the WBIDC.

However, a section of the government officials contested the claim. “This process will be followed in case TCG or Tatas, the original two promoters along with WBIDC, want to sell their shares. There is no such restriction when WBIDC wants to sell its share. It can find value in any manner it wants,” the official said.

Sources said the chief minister had asked the government to speed up the sale process keeping in mind the dire need to bring in a new investor with a deep pocket to bail out HPL.

Along with revenue maximisation through the sale, importance will also be given on what the new investor plans to do with the company, whether it is worthy and able to inject fund and expand the business.

HPL needs cash injection of Rs 1,000 crore apart from integration with a bigger petrochemical player. The company is suffering because of the cyclical nature of the petrochemical business since it is not integrated to a refinery.

There is a possibility that large Indian and overseas players could put in bids. However, much will depend on the stand taken by TCG.

 
 
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