W Bengal govt accepts IOC's bid for Haldia Petrochem stake

The West Bengal government has accepted the sole bid of union government-owned Indian Oil Corporation (IOC) for the state government's 39.9 per cent stake in the near-bankrupt Haldia Petrochemicals Ltd.

The West Bengal government holds its stake through the West Bengal Industrial Development Corporation (WBIDC).

The Chatterjee Group (TCG), led by Purnendu Chatterjee, owns the remaining 40.1 per cent in HPL. Under court orders, it will have 30 days to match the IOC bid.

IOC has an 8.89 per cent stake as a strategic investor and the rest is with financial institutions and Tata Group companies Tata Motors and Tata Power.

Earlier reports had suggested that apart from IOC, Reliance Industries Ltd (RIL), IndianOil Corp (IOC) and a combine of gas distributor GAIL India and explorer Oil India Ltd were likely to bid for the project (See: RIL, IOC, GAIL-OIL lead race for Haldia Petrochem stake).

But now it is clear that IOC's will be the sole bid considered when the actual sale takes place on 7 October (See: Sole bidder Indian Oil bids below Rs3,000 cr for 31% Haldia Petro stake).

"After a series of meetings of the Group of Ministers (GoM) on HPL, the government decided to accept the IOC bid for WBIDC's stake in the petrochemicals firm," Bengal industries minister Partha Chatterjee, who also heads WBIDC, told newspersons today.

Although he declined to divulge the bid price and the reserve price fixed by transactional adviser Deloitte, Chatterjee said that IOC's offer was the highest.

He said the letter to TCG for exercising RoFR (right of first refusal) would be issued ''as quickly as possible''.

The oil PSU submitted its proposal on Monday, and it was was opened today.

IOC's petrochemicals group head S Mitra flew in to Kolkata from Delhi during the day at behest of the state government.

Monday was the last day for price bid submission. Chatterjee confirmed there was only one bidder.

Such is the secrecy being maintained over the matter that officials at WBIDC are strictly barred from entering the boardroom and Chatterjee's chamber on the fifth floor.

''Even when some files are to be scanned or to be given the final nod, none of us are allowed and this is being followed very strictly,'' a senior WBIDC official told Business Standard.

The West Bengal government had in May sought buyers for its stake, or 67.5 crore equity shares, in HPL. The stake then put on the block included 15.5 crore shares to which TCG laid claim, and approached the courts.

The Calcutta High Court permitted the state government to go ahead with the sale, provided TCG is given first refusal.

If TCG fails to take the shares at the discovered price, the state government will transfer the stake to IndianOil.

Deloitte Touche Tohmatsu India is acting as advisor to the West Bengal government in the transaction and will manage the divestment.

HPL had accumulated losses to the tune of Rs1,980 crore as of 31 March 2012, and total debt of over Rs3,500 crore.

The plant, located 125 km from Kolkata at Haldia, operates at about 65 per cent of installed capacity.

Acquisition of stake in HPL makes sense to both IOC and RIL, which produce naphtha, the feedstock used to produce valuable chemical compounds.

With IOC's offer having been accepted, the speculation over a confrontation between Mukesh Ambani and Vedanta Group's Anil Agarwal over the stake in the ailing Haldia Petrochemicals Ltd (HPL) is now over.