Reliance Industries (RIL), which had been considered the strongest contender, had not put in a bid by the noon deadline, sources privy to the development said.
RIL had objected to the state government's decision to receive bids in sealed envelopes instead of an open auction. State-owned gas utility GAIL India, which planned to bid with state explorer Oil India (OIL), dropped out over certain clauses in the shareholder agreement. The West Bengal government was not agreeable to companies bidding in a consortium, they said.
Mining baron Anil Agarwal-owned Vedanta Resources, through its subsidiary Cairn India, and Jindal Steel and Power had also expressed interest but decided not to bid.
State-owned Oil and Natural Gas Corp had pulled out previously because of concerns over litigation involving HPL, sources said.
Purnendu Chatterjee-led Chatterjee Group (TCG), a joint promoter of HPL, will have the right of first refusal over the West Bengal government's stake. TCG will have 30 days to match the highest bid and another month to make payments.
Sources said the West Bengal government had in May sought buyers for its 39.99% stake, or 67.5 crore equity shares, in HPL. The stake put on the block included 15.5 crore shares on which TCG laid claim and approached the court.
The Calcutta High Court advised the state government to go ahead with the sale of the remaining stake, which is about 31%.
TCG holds 69 crore shares, or 40.88%, in HPL. IOC has an 8.89% stake as a strategic investor and the rest is with financial institutions and Tata Group companies Tata Motors and Tata Power.
Deloitte Touche Tohmatsu India is the transaction advisor to the West Bengal government and will manage the divestment. Sources said HPL makes strategic sense for IOC as it has a significant stake in the company and also supplies feedstock naphtha to it.HPL had an accumulated loss of R1,980 crore at the end of March 31, 2012, and debt topping R3,500 crore.
The plant, located 125 km from Kolkata at Haldia, operates at about 65% of installed capacity.
* RIL didnt put in a bid by the noon deadline, sources said, as it had objected to the states decision to receive bids in sealed envelopes
* While GAIL dropped out over certain clauses in the shareholder agreement, Cairn India and Jindal Steel and Power also decided not to bid
* Purnendu Chatterjee-led Chatterjee Group (TCG), a joint promoter of HPL, will have the right to first refusal over the West Bengal governments stake. It will have 30 days to match the highest bid and another month to make payments