Haldia Petrochemicals Ltd. (HPL), which ended 2011-12 with a loss of Rs.865 crore, is in serious fiscal distress and is desperately seeking a credit line from banks and financial institutions to maintain operations.
With margins heavily depressed, the company is finding it difficult to fund its operations (mainly buying naphtha) and the prospect of going in for a prolonged forced shutdown is now looming large, it is learnt.
However, HPL, which staved off a mandataory Board for Industrial and Financial Reconstruction (BIFR) referral in March 2012 by converting part of its loan into equity (to the banks), has now drawn the interest of a new strategic investor — Mangalore Refinery and Petrochemicals Ltd. (MRPL), which is keen to buy into the government stake in HPL (around 43 per cent).
The ONGC-subsidiary has approached the West Bengal Government for permission to carry out a due diligence, saying that the buy-out would be a ‘win-win' situation for HPL and MRPL.
It may be mentioned here that at the loan monitoring meeting held in Mumbai, on Monday, banks and financial institutions expressed their reservation about taking further exposure to HPL whose cumulative losses touched Rs.1,900 crore on March 31, 2012, following four years of losses. HPL's lenders include ICICI, SBI and IDBI. In view of the lenders discomfort about extending any further line of credit to the ailing company, several options were discussed. These included getting a strategic investor with financial muscle and securitising any line of credit by pledging a part of the sales of HPL's two high margin products — benzene and butadiene. HPL's debt have mounted to over Rs.4,000 crores now.
