| NEW ORDER
Calcutta, Sept. 23: The Bengal government has upped the ante against The Chatterjee Group (TCG) after winning the crucial legal battle for control over Haldia Petrochemicals Ltd (HPL) in Calcutta High Court.
A board meeting has been called on October 1 to discuss a number of pending and contentious issues that have been hanging fire for over two years because of the legal battle that was first fought before the Company Law Board (CLB) in Delhi and then at Calcutta High Court.
The notice for the board meeting was circulated on Friday afternoon, just hours after Justice Jayanta Kumar Biswas read out the order that effectively put the state government in control at HPL.
Sources said the board would discuss the issue of share allotment to the financial institutions led by IDBI — a contentious subject on which the court ruled in favour of the state government, the proponent of the proposal.
The meeting will also finalise the accounts for the last three years and set the date for the meeting of the annual general meeting. HPL hasn’t held a shareholders’ meeting since TCG moved the CLB in August 2005 to contest the allotment of shares to the Indian Oil Corporation (IOC).
The annual reports were not published either since the board had not passed them. “Since there is no restraint on the board, it can take any decision if it is backed by the majority,” a legal expert said.
However, the scenario may change entirely if TCG obtains a stay on Calcutta High Court’s order from the Supreme Court. Anticipating the possible TCG move, the state government filed a caveat before the Supreme Court on Saturday to ensure that TCG did not secure an ex-parte stay order on the high court’s judgment.
If the board meeting is held as scheduled, the state government will be able to push through all the proposals with the support of the financial institutions which are keen to pick up a small stake in HPL.
The corporate debt restructuring package, which was approved by the lenders in January 2004 and took HPL out of near bankruptcy, had called for the conversion of loans worth Rs 127 crore into equity. It had also proposed the induction of the IOC.
While it couldn’t stymie the IOC from coming on board, TCG successfully pre-empted the share allotment to lenders. “It has been on the agenda for the last two years. The board will approve the proposal now,” an insider said.
The state government, which enjoys the support of the majority of the directors, has publicly expressed a desire to turn HPL into a professionally run company. Both TCG and the government have four members each on the 16-member board, which also has representatives from the financial institutions and independent directors.
If and when the AGM takes place, the shareholders — the West Bengal Industrial Development Corporation, TCG, the Tata Group and the IOC — are expected to ratify recent changes on the board as well.
Atul K. Rai and M.V. Rao joined the board as nominees of IFCI and WBIDC at the last board meeting on September 12. It is also expected to endorse the re-appointment of Swapan Bhowmik as managing director for three years with effect from April 1.
The Bengal government holds a 51.67 per cent stake in the state’s second-largest company which registered gross sales of Rs 8,300 crore last year and earned a profit of Rs 530 crore. The IOC and Tata Sons own 8.19 per cent and 2.46 per cent in the company respectively while TCG holds a 37.68 per cent.