The cash-strapped Haldia Petrochemicals Ltd. (HPL) is trying to avert a shutdown till the completion of the ongoing divestment process, which is likely to spill over to early 2014. However, with each passing day, this is becoming a tough job.

The joint venture company’s losses in the first-half of the current fiscal are estimated at Rs.400 crore. The figures are yet to be audited and may rise, sources say. HPL has been in the red since 2008-09 with an accumulated loss of nearly Rs.2,000 crore till March 31, 2013.

It is set to make a mandatory reference to the Board for Industrial and Financial Reconstruction (BIFR) as a potentially sick company after having eroded 50 per cent of its net worth. “This has already happened, but the reference is yet to be made as it requires board approval,” a source said.

Starved of cash, the company is operating at 50 per cent capacity utilisation. Sources said that it was inefficient to operate petrochemical units like HPL at a low throughput due to high-energy consumption at lower loads. HPL’s capacity is 6.27 lakh tonnes per annum.

Total debt

“The petrochemical market is tepid now, but HPL could have sold more with higher production.” Sources said HPL’s total debt had crossed Rs.4,000 crore, and its lenders were unwilling to increase their exposure till the promoters infused fresh equity.

“In June 2012, the government had assured lenders as well as the credit-rating agency that it will induct a new strategic partner or an investor in six months or at least it will initiate action in that direction,” sources said.

While things have indeed moved, though belatedly, it may take another six months before they take a final shape, either by way of IOC gaining control or existing promoter

The Chatterjee Group doing so by matching the offer.

HPL now takes its naphtha feedstock from Indian Oil Corporation, which is in a bid to acquire the 39.9 per cent equity stake in HPL which the government is trying to divest.

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