A consortium of banks and financial institutions, led by the Industrial Development Bank of India, is set to pull the plug on the Rs 5,600-crore (Rs 56-billion) Haldia Petrochemicals.
The lenders are expected to issue a notice to the company recalling their loans any day now. At the next stage, they plan to slap the 60-day notice under the Securitisation Ordinance to seize the assets of the company.
Haldia Petrochemicals officials said in Kolkata they were unaware of any such move on the part of the financial institutions.
"Unlike other projects, here is an outfit which is readily marketable. At least two domestic companies are only too willing to pick up Haldia Petro as the quality of the plant is very good. We cannot live on the promoters' promises for ever," said a banking source.
A source in the lending community said, "The promoters were slated to bring in Rs 500 crore (Rs 5 billion) by the end of November. The money was not infused. Gas Authority of India Ltd was supposed to bring in Rs 200 crore (Rs 2 billion) worth of equity. That too did not happen. Instead, Haldia has entered into a marketing arrangement with Gail. Finally, the company plans to securitise Rs 300 crore (Rs 3 billion) worth of cash flows. But this cannot be termed a funds infusion. This is securitisation of the income stream, which should be used to repay the debt. Time is fast running out for Haldia Petro."
Sources at the lenders to Haldia said Indian Oil was ready to enter the fray but was not allowed to do so as it wanted control of the company.
If Haldia is not able to come out with a solution "very soon", the lenders may invite IOC to take over the company using the Securitisation Ordinance.
The account may not have turned into a non-performing asset for some of the banks which also offer cash credit facility to Haldia Petro. But Haldia Petro has not paid any dues to IDBI for the last three quarters. The institution and a clutch of 35 banks have an exposure of Rs 4,000 crore (Rs 40 billion) to Haldia Petro. Its equity is to the tune of Rs 1,260 crore (Rs 12.6 billion).
At present, the government of West Bengal and the Chatterjee Group hold 43 per cent each in Haldia Petro while the remaining 14 per cent is with the Tatas. However, the Tatas are planning to exit Haldia Petro and the Chatterjee Group is expected to take management control of the company.
Haldia's promoters had earlier indicated that Gail would be roped in as a strategic partner.
The IDBI-led consortium of bankers had set November 30 as the deadline for the promoters to bring in Rs 500 crore (Rs 5 billion) as fresh capital. An additional sum of Rs 200 crore (Rs 2 billion) was to be brought in by December.