Even though the West Bengal government-controlled Haldia Petrochemicals (HPL) is in the divestment mode, the company?s board has decided to refer HPL to the Board for Industrial and Financial Reconstruction (BIFR).

The company had invited expression of interest (EoI) for divesting West Bengal government?s entire 39.99% stake on May 10. But, the HPL board on June 4 decided to refer the company to the BIFR. HPL?s co-promoter, The Chatterjee Group (TCG), called it unlawful and said it was suppression of fact under the EoI norms. It has filed a petition in the Supreme Court. The CAG has also taken it under review.

HPL managing director Sumantra Chowdhury told Fe: ?anyone picking up the government?s stake in HPL would be holding stake in a BIFR company. There is nothing wrong in it.?

Although the board has decided to refer the company to BIFR, it would come under BIFR?s purview only after the proposal is passed in the annual general meeting. The date of the AGM would be decided in the August 5 board meeting, Chowdhury said.

A director on the condition of anonymity said: ?When TCG raised an objection, there was no reply on the issue from anyone. But the board recorded the objection.? On June 10, the company opened the EoI and there were responses from biggies such as Reliance Industries, ONGC, GAIL, Indian Oil, JSPL and Vedanta. On June 13, HPL?s audit committee and the board approved the package, which the company has proposed to the BIFR. But the package had no mention of a cutoff date. In case of referring a company to the BIFR, the management proposes a rehabilitation package mentioning a date of effect or a cutoff date.

TCG has already filed a case in the SC and the steps for divestment have been stopped. Interested parties were supposed to submit quotations for the bid on July 10, but that didn?t take place.

Experts said companies like IOC, ONGC, Reliance and others were interested in picking up stakes because of the value of its assets. HPL?s peak net worth has eroded over 50% and the company has an accumulated loss of R1,980 crore. The company in FY 13 posted a net loss of R907 crore on a turnover of R9,600 crore. The company posted an EBIDTA loss of R265 crore in FY13. A source said of the three auditors appointed by CAG, two have audited while one has kept its observation and not signed the accounts. The auditors have mentioned overstatement of the value of plant and fixed assets.

It has been pointed that the company has underreported losses since it has not made provisions for ascertained contingent liability and commitments.