India’s Haldia Petrochemicals to delay eight projects worth $800m

12 March 2012 03:56  [Source: ICIS news]

KOLKATA (ICIS)--India’s Haldia Petrochemicals Ltd (HPL) will have to delay or even scrap eight downstream projects entailing investments of $800m (€608m), as it expects its losses to exceed its net worth at the end of the financial year on 31 March, a senior company official said when contacted on Monday.

HPL would have to report to the Board for Industrial and Financial Reconstruction (BIFR) as a “sick industrial unit” when it finalizes its full-year financial results in April, the official said. The BIFR monitors the revival or closure of “sick industrial units” in the country.

The company recorded an accumulated loss of $310m for the first nine months of the financial year ending 31 December, 2011. This figure, together with losses during January-March 2012, would exceed the net worth of the company, according to the company official.

HPL had planned last year to invest $800m in eight downstream units over a period of three to four years. The units included butene-1, ethylene-propylene-diene monomer (EPDM), styrene butadiene rubber (SBR) and maleic anhydride (MA).

The capacities of the units have not been revealed but the projects were to be listed either as subsidiaries of HPL or as special purpose vehicles (SPVs).

“HPL had initiated talks with leading international investors like Abu Dhabi Investment Authority and Kuwait Investment Authority, for participation in the downstream projects. Even government owned GAIL India was keen to pick up equity in the projects,” the company official said.

“But with HPL going through poor financial performance and a potential sick company, there is a lot of uncertainty over the downstream projects,” the official added.

The company’s two principal shareholders, The Chatterjee Group (TCG) (44.21% interest) and the West Bengal state government (43.29%), are in a tussle over the ownership of HPL, further undermining the company’s new projects.

The West Bengal government is insisting on auctioning its entire holding of 155m shares to seek higher valuations as it exits HPL.

However, TCG wants complete control over HPL through a transfer of the state government’s stake as per a March 2002 agreement between the two shareholders.

TCG has opposed the state government’s exit through an auction as it would result in the entry of another promoter, leading to the dispute.

India’s largest refiner, Indian Oil, holds a 9.62% stake in HPL, while the rest is held by Tata Group.

HPL runs a petrochemical complex at Haldia in West Bengal, including a naphtha cracker with a nameplate capacity of 670,000 tonnes/year.

($1 = €0.76)

By: Ajoy K Das
+65 6780 4359

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