Reliance, IOC, Cairn India in race for HPL: report

Reliance Industries, Indian Oil Corp and Cairn India are among six firms that may submit price bids early next month to buy about 31 per cent stake in beleaguered Haldia Petrochemicals Ltd (HPL).

RIL, IOC, Vedanta Resources through subsidiary Cairn India, state-owned Oil and Natural Gas Corp (ONGC), gas utility GAIL India Ltd and Naveen Jindal's Jindal Steel and Power Ltd had submitted expressions of interest to buy a 31 per cent stake in HPL held by the West Bengal government.

The six companies are doing due diligence and they will be asked to submit price bids in September, sources with direct knowledge of the development said.

Purnendu Chatterjee-led The Chatterjee Group (TCG), a joint promoter of HPL, will have the right of first refusal to match the highest bidder. TCG is currently in a legal battle with the state government over control of the company.

Sources said the West Bengal government had in May sought buyers for its 39.99 per cent stake, or 67.5 crore equity shares, in HPL. The stake put on the block included 15.5 crore shares on which TCG laid claim and approached the court.

The Calcutta High Court advised the state government to go ahead with the sale of the remaining stake, which is about 31 per cent.

TCG holds 69 crore shares, or 41 per cent, in HPL. 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.

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

Sources said while TCG has the right of first refusal, it will need to arrange for funds within a month. HPL had an accumulated loss of Rs 1,980 crore at the end of March 31, 2012, and debt topping Rs 3,500 crore.

Further, the plant, located 125 kms from Kolkata at Haldia, operates at about 65 per cent of installed capacity.

Sources said HPL makes strategic sense to both IOC and RIL as they produce naphtha, the feedstock used to produce valuable chemical compounds.

Besides being able to supply naphtha from its Jamnagar refineries to HPL, RIL would get a readymade factory to cater to demand for petrochemicals in the eastern region.

IOC, which owns a refinery at Haldia, supplies a very small quantity of HPL's naphtha requirement as TCG imported the bulk of the needs.

Originally, Mangalore Refinery and Petrochemicals Ltd was interested in buying the stake but parent ONGC submitted the expression of interest. GAIL has a petrochemical plant at Pata in Uttar Pradesh and wants to expand in the segment