TCG disputes the method of arriving at the value of the share through an open auction

The West Bengal Government has initiated steps for selling its stake in the crisis-ridden Haldia Petrochemicals Ltd (HPL) through an ‘open auction,’ even as the other major promoter of the joint venture, The Chatterjee Group (TCG), said that the company’s articles of association did not allow this manner of transaction.

“The method of price determination cannot be by auction,” a source told The Hindu. Another source said that the valuation of HPL could only be done by a valuer agreed upon by the two main promoters.

Government stake

The State Commerce and Industry Department has notified the sale of 39.9 per cent of the government stake in HPL held through the nodal industry promotion agency, the West Bengal Industrial Development Corporation (WBIDC).

The issue will be put up before the WBIDC board after which the tender documents would be prepared for the auction. The price discovered through the auction will be offered to TCG, the government said.

However, TCG, with whom the government has a frosty relationship, disputed the method of arriving at the value of the share through an open auction.

“There is no scope for auction in this manner… if any partner decides to sell, it will have to offer its stake to the other at an agreed price,” a TCG source said.

Change of guard

HPL, which saw a change of guard in June 2012 when it got a new managing director through a virtual board room coup, was sucked into a vortex soon after, and is now carrying unsold inventories of over 29,000 tonnes of polymers and chemicals.

It has had to dip into its working capital kitty to meet its revenue budget commitments, and is planning to shut down operations for sometime to check losses.

Original promoters

The Tatas, who, with WBIDC and TCG, were among the original promoters, have pared their 8.33 per cent stake to 2.45 per cent. IOC, too, has a stake as does the financial institutions which sold an eight per cent stake in March this year to stave off a mandatory Board for Industrial and Financial Reconstruction (BIFR) referral of HPL as a potentially sick company.

Last week, the government constituted a committee of secretaries to oversee the company’s affairs.

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