Chatterjee Group to resist IndianOils entry on Haldia Petrochmicals board

Written by Indronil Roychowdhury | Kolkata | Updated: Feb 28 2012, 08:43am hrs
Haldia Petrochemicals private promoter, The Chatterjee Group (TCG), will resist Indian Oil Corporations (IOC) entry into the board as long as the 155 million shares, constituting 9.7% paid-up equity, are not transferred to TCG.

At present, TCG has a 44% holding in HPL. The transfer of 155 million equity shares would take its stake up to 53.7%.

A source close to the development told FE that IOC, with a 9.6% stake in HPL, wants to have its representative on the board but it was not tenable until its stake went up above 10%. The government in order to allow IOC get on to the board would have to transfer some shares to IOC to take its holding to above 10%. But Purnendu Chatterjee as the chairman of the board could veto it.

Apart from IOC, State Bank of India, the lead banker of both HPL and IOC, also wants a seat on the board by converting its debt into equity. IOC has claimed that its R115.2 crore worth of loan (90% of R128 crore loan to HPL) be converted into equity. But TCG will consider the proposals only when the 155 million shares issue is sorted.

All these proposals are to be raised at the next board meeting, the date for which has not been decided as yet.

An HPL source said the transfer of 155 million shares has to be done by March, according to the agreement between the West Bengal government and TCG in May 2005.

TCG, considered as the beneficial owner of the shares according to the agreement, pledged those in getting R147 crore from West Bengal Industrial Development Corporation. The loan was supposed to be repaid in eight instalments by March 2012 followed by the physical transfer of the shares. But the earlier government refused to accept payments after three instalments, while trying to project HPL as a defaulter, and wanted the 155 million shares to come back to it.

TCG, on the other hand, argued that it was not a defaulter since it did not fail to pay but that the government refused to accept instalments. The entire amount was lying in the escrow account.

However, both the government and TCG are in a limbo whether the 155 million shares would go back to TCG. If the shares go back to TCG, the government would be the owner of 520 million shares, which translates to a 44.5% holding. But if the government retained the 155 million shares, it translates to a holding of 54.2%.

None of the parties would be able to do anything with its shares unless the final holding was determined. While according to a Supreme Court order the government is the owner of the entire 675 million shares, TCG argued that it has the right to majority shareholding.

State commerce and industry minister Partha Chatterjee said although the apex court has termed the government as the majority shareholder, TCG has a different opinion. We are taking a legal consultancy in this matter, Chatterjee said.

A WBIDC official said the government doesnt have any immediate plans of offloading its shares. But it has three options continue as a shareholder in the company, offer its holding to a strategic investor or put its shares to auction.

All these options would be considered at a later stage, Chatterjee said.