Calcutta, Sept. 21: The Bengal government has wrested control of Haldia Petrochemicals Ltd (HPL), the talisman of Bengal’s industrial revival and the second largest company in the state.
Calcutta High Court today set aside the order passed in January by the Company Law Board that had directed the state government to leave the project and sell its stake to The Chatterjee Group (TCG), its warring partner.
The court also upheld the government’s decision taken in 2005 to offer a stake in HPL to the state-owned Indian Oil Corporation (IOC) and paved the way for the financial institutions to pick up equity in the company.
It is certain that TCG will move Supreme Court challenging the orders passed by Justice Jayanta Kumar Biswas. The TCG counsel prayed for a stay on the order, but Justice Biswas turned it down.
“We are yet to get a copy of the judgment. We can’t comment,” a TCG spokesperson said.
The Bengal government was visibly happy with the court’s ruling. “I have heard that we have won the case,” chief minister Buddhadeb Bhattacharjee said.
Industries minister Nirupam Sen said the IOC would play a greater role in HPL since it is the anchor investor in the proposed chemical hub.
“The state government is now free to take a decision on its shares,” Sen said, hinting that the government might sell its stake to the IOC.
The Bengal government holds a 51.67 per cent stake in the company which registered gross sales of Rs 8,300 crore last year and earned a profit of Rs 530 crore. The company makes and sells polymers and chemicals.
The IOC and Tata Sons own 8.19 per cent and 2.46 per cent in the company, respectively, while TCG holds 37.68 per cent.
The CLB had directed the WBIDC to transfer 155 million shares to TCG and hand over management control.
It had also said that 271 million preference shares should be issued to TCG which would be converted at a later stage at par.
The order also provided for the issue of another 520 million equity shares to TCG at a base price of Rs 28.80 per share.
TCG had filed an appeal before the high court to contest one part of the CLB order: its ratification of the allotment of 150 million shares to the IOC.
The financial institutions, led by the Industrial Development Bank of India (IDBI), also appealed against the CLB order since their share allotments had been stalled.
Under the corporate debt restructuring package, the institutions were supposed to convert loans worth Rs 127 crore into equity.
In 2005, the state government had given Chatterjee the option to acquire another 36.87 per cent in the company. Chatterjee was to furnish an amount of Rs 1,560 crore for the stake but he chose to dawdle on the offer.
In 2006, the government gave him an ultimatum to either accept or decline the offer.
Exasperated with his vacillation, the government called off the deal three days before the payment deadline.
J Sagar Associates and R Ginodia & Co acted on behalf of the state while Fox & Mandal represented the institutions.