Deloitte has valued Haldia Petrochemicals? (HPL?s) shares at R3.80 each, following which the West Bengal government is supposed to put its entire 51% holding in HPL, with 67.5 crore shares, for auction. The state government had hired Deloitte as a transactional advisor for valuation of HPL shares in January.

While The Chatterjee Group (TCG), the co-promoter, is supposed to get the first right of refusal, industry minister Partha Chatterjee, also the chairman of HPL, had earlier said that TCG would have to pay the price that would be derived from the auction.

TCG sources told FE that the government is not eligible to put 67.5 crore shares for auction since 15.5 crore shares out of it belong to HPL, according to an agreement made in 2008. TCG pledged 15.5 crore shares to WBIDC against an interest-free loan of R147.25 crore and the government can?t touch the shares if TCG didn?t default in repaying.

TCG hasn?t defaulted in paying and the government was supposed to transfer the shares on March 31 but it didn?t and was wrongfully claiming to put the entire block on auction. TCG has also moved the International Court of Law against the government, a TCG source said.

TCG, founded by Purnendu Chatterjee, was also not eager to pick up stakes even at R3.80 per share, much below the face value of R10 each, since Deloitte has reported that the plant has lost all operational efficiency for running at below 50% capacity for a long time. HPL sources told FE that Toyo Engineering withdrew the performance guarantee in November last year making clear that the plant would not have any operational efficiency and would be hugely damaged if it continued operations at a capacity below 80% for a longer period.

HPL sources said the plant was running below 50% capacity since September last year and the board has been opting for a shut down since then. But the government, which took over the management control from TCG, was not allowing a shutdown to prevent a loss of face.

While the plant was incurring a loss of R130 crore per month for running at a lower capacity, it would have incurred a loss of R30 crore per month if it opted for total

shut down. ?Given the plant?s condition there are fears that there would be no takers for it,? an HPL official said.

WBIDC managing director Krishna Gupta, however, said the process to go for an auction was on but nothing final has been decided.