HPL asks SBI for credit help

Haldia Petrochemicals Ltd, in a desperate bid to raise at least Rs 1,000 crore (Rs 10 billion) for working capital, is knocking at the doors of State Bank of India, the country's largest lender, to secure a part of it.

The management of the city-based petrochemicals firm is in touch with the public sector bank, seeking letters of credit, according to people aware of the development. 

HPL chairman and West Bengal's industries minister Partha Chatterjee said a team of officials,  including state commerce and industries secretary C M Bachawat, West Bengal Industrial Development Corp managing director Krishna Gupta and HPL managing director Sumantra Chowdhury, was set up to convince SBI chief Pratip Chaudhuri on extending LC.

Last week, HPL board had reinstated its corporate debt restructuring committee, which had stopped functioning almost 10 years ago, in a bid to woo lenders.

The firm is immediately in need of Rs 1,000 crore (Rs 10 billion) for working capital.

The major lenders to the firm include IDBI Bank, ICICI Bank, IFCI, Punjab National Bank, SBI, Allahabad Bank and Union Bank of India.

Early this year, HPL's board had cleared a proposal in order to save itself from reporting to the Board for Industrial and Financial Reconstruction as a potentially sick company by converting Rs 128 crore (Rs 1.28 billion) debt into equity at par basis, through which lenders got an eight per cent stake in the firm.

BIFR is a government agency that identifies sick industrial companies and assist viable companies in reviving their operations and shut down the others.

According to HPL's financial statement, there is a massive increase in short-term financial borrowings of the company to Rs 951.7 crore (Rs 9.51 billion) in 2011-12.

Meanwhile, the Calcutta High Court is set to give a verdict on whether The Chatterjee Group, which owns 41 per cent of HPL, will be able to approach the International Court of Arbitration on December 21 against the West Bengal government, the firm's co-promoter, in a prolonged ownership battle.

ICA is the world's leading institution for resolving international commercial and business disputes.

Earlier, the Supreme Court had asked the high court to dispose the case in December.