Haldia Petrochemicals Ltd. is set for a mandatory reference to the Board for Industrial and Financial Reconstruction for having eroded 50 per cent of its peak net worth.

HPL’s losses are estimated at Rs. 900 crore in 2012-13, up by Rs. 50 crore over that of 2011-12.

“Unless one of the key promoters of the company, the West Bengal government or The Chatterjee Group, puts in additional equity, the mandatory reference will have to be made,” sources said.

This reference, which labels a company as a potentially sick one, has to be made before the quasi-judicial body, once 50 per cent of its peak worth is eroded.

It may be mentioned that a year ago, HPL had averted such a reference when a part of its Rs. 3633-crore debt was converted to equity by its lenders, which included State Bank of India, ICICI and IDBI. Rs. 128 crore of loan-conversion translated into an eight per cent stake for the lenders, expanding HPL’s equity from Rs. 1560 crore to Rs. 1688 crore.

With its lenders refraining from further exposure to the company, HPL ran into a bad patch in 2012-13, when its capacity utilisation averaged at around 65 per cent due to acute shortage of working capital. “Operation of petrochemical units like HPL at low throughput is inefficient due to high energy consumption at lower loads,” sources said.

“HPL does not have adequate funds to buy its raw material, 50 per cent of which is imported with the rest being sourced from IOC and HPCL,” sources said.

The company saw a change of guard last year with the state government bringing in its own nominee as the managing director. However, insiders said that although the new incumbent, a former transport secretary, tried his best to turnaround the flagship company, he failed to get funds from the lenders. At least three rounds of meetings were held with the lenders in 2011-13.