The Telegraph
Since 1st March, 1999
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Indian Oil rekindles Haldia funding plan

Calcutta, May 25: Indian Oil Corporation (IOC) has told Industrial Development Bank of India (IDBI) it is ready to invest over Rs 468 crore in Haldia Petrochemicals (HPL).

IOC has described its new overture as “an open-ended offer” and told the financial institution it would pour in as much money as required in the petro-chemical company, sources in IDBI said.

Senior officials of HPL confirmed the oil major has made the offer. “We are aware of IOC’s renewed interest and the fact that they told IDBI about it,” they added.

The official spokesperson of IOC would not be drawn on whether a new plan to pour money in HPL is on the table, but said his company is in talks with HPL lynchpins.

“We have no reports that IOC has given a revised investment proposal to IDBI. What we do know, however, is that the financial institutions have asked the promoters of HPL to negotiate with IOC. Since we supply naphtha to HPL, we have a close relationship with them,” he added.

Earlier, Indian Oil had given a proposal under which it would have pumped in Rs 468 crore in exchange for a 26 per cent stake. The PSU also wanted management control, a demand that was strongly opposed by The Chatterjee Group, one of HPL’s main promoters.

The Rs 5,170-crore project is saddled with a crushing debt burden of Rs 4,200 crore. The company stopped servicing debts from January last year. The promoters asked IDBI, the lead financial institution, to work out a debt-restructuring package for the company.

IDBI approved a loan-recast plan worth Rs 700 crore on August 31, 2002. The institution said HPL would have to bring in Rs 500 crore by November 30, 2002, and an additional Rs 200 crore by February 28, 2003.

Gail (India) Limited had also told HPL promoters it would invest Rs 200 crore in the equity to acquire a 10 per cent stake in the venture. The pipeline major also decided to forge a Rs 300-crore marketing tie-up. The plans faltered later, when Gail said it would not infuse money in HPL unless financial institutions clear the debt-restructuring package for the petrochemical project.

“The Union finance and petroleum ministries are looking into the debt recast,” Haldia Petro officials said. Since fresh equity has not been brought in, IDBI has given HPL time until September 30 to rustle up the funds. Loans to the company will become a non-performing asset after that.

Meanwhile, HPL has captured 60 per cent of the market in eastern India and 22-23 per cent in the entire country.

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