The Chatterjee Group (TCG) chairman Purnendu Chatterjee is likely to step down from the chairmanship of the Haldia Petrochemicals (HPL) board, with West Bengal Industrial Development Corporation (WBIDC) managing director Nandini Chakraborty taking over as the new chairperson.

After a long board meeting on Monday, the members put the decision on hold, and announced that the company would raise R200 crore from the market for its proposed butadiene project.

But the possibility that the WBIDC MD is likely to be the new chairperson is an indication that the West Bengal government is not exiting from the business immediately by selling its stake to TCG.

The government currently holds a 44.5% stake in the company, only 0.5% more than what TCG holds. But TCG was looking for majority holding in the company ? more than 77% ? and was hoping that the government would first complete the process of transferring 520 million shares before transferring another lot of 155 million residual shares.

But the state government now wants to auction its shares. With Chakraborty likely to be new chairperson, the government will look into the possibilities of roping in Reliance Industries or Indian Oil.

Sources close to the development told FE that though TCG was expecting the new government to sort out all issues and pave the way for it to gain maximum holding, the government wasn’t toeing that line. Industry minister Partha Chatterjee had earlier said that the government was eager to sell its stake despite a Supreme Court order that it should keep its holding.

The government, following the SC order, said it would first take legal opinion and let the HPL management know about its stake sale plan by October 31.

But the government did not officially communicate to the HPL management. Instead, it floated the idea of offering its shares via the public bidding route. But there are impediments to this option because according to the company’s articles of association, the government, if it wants to offload its holding, will first have to offer its share to TCG (which owns 44% of the company) and then to the Tatas (2.88%) before going for an institutional placement or a public offer.

Source said that Purnendu Chatterjee at the board meeting on Monday made an offer that the government should transfer its shares to TCG at the face value (of shares) ? Rs 4 each ? since its rating has already been downgraded. Chatterjee argued that even if the government wanted to auction its shares, the articles of association did not allow it to do so unless it got a clearance from TCG and the Tatas.

The TCG chairman is learnt to have told the board that it was ready to pay a 100% premium above the face value of shares ? Rs 8 apiece ? and that the government should settle with it. But the government was quoting the Company Law Board price of Rs 28.80 per share, which TCG was not ready to give.

So the government is looking for other buyers, preferably Reliance or IOC, to which TCG has objections.

According to a director, if the government doesn?t agree to TCG’s terms, it actually violates the articles of association and the memorandum of understanding signed between the West Bengal government and TCG. TCG also has the option of taking it to an international court of law, since its investment in HPL has been through its foreign arms, TCG Mauritius and TCG US. Its entire investment has been treated as foreign direct investment, the director said.

But HPL managing director Partha Bhattacharyya earlier said that if the company went for any more legal battles, it would be difficult for it to survive, since it already has an accumulated loss of Rs 1,080 crore and a negative net worth.

With the shareholding issue still in dispute, there were possibilities that the plant may even opt for a shutdown shortly, sources said.