The process of a hammering out a truce between the two promoters of Haldia Petrochemicals Ltd -- The Chatterjee Group and the government of West Bengal has begun.
Sources in the government informed that TCG chief Purnendu Chatterjee had an informal discussion with West Bengal's industry minister Nirupam Sen on issues relating to the settlement of the dispute in HPL a few days ago.
Though there was no official confirmation of the meeting, sources said that the next hearing of the Company Law Board had been deferred.
This indicated an attempt at a truce the success of which would depend on the exact terms laid down by the two sides, sources said. The CLB hearing was slotted for November 21.
Sources indicated that the TCG chief had an open mind for settling the dispute and maximising the valuation of HPL as a venture. The legal battle between the two promoters started in August 2005 when TCG group went to CLB against the preferential allotment of HPL equity to Indian Oil Corporation.
TCG as part of the litigation placed before CLB certain documents, which it said proved that GOWB had promised substantial shareholding in HPL to IOC without the knowledge of TCG and in violation of the joint venture agreement between the two promoters.
GoWB had replied to the TCG stand. CLB on its part had advised both sides to settle the issue amicably, said sources.
IOC had paid Rs 150 crore (Rs 1.5 billion) to HPL earlier this year for 7.5 per cent stake in the outfit at a price of Rs 10. The HPL management held back allotment of shares to HPL. In view of the boom in the polymer industry, issue of HPL shares at par to IOC attracted criticism. Later on the state government intervened and allotted the shares IOC. TCG group appealed to CLB against the move.
As HPL was doing well and was close to wiping out its accumulated losses, issue of shares to IOC at face value would have made it difficult for HPL to issue shares to the public at a premium when it decided on its IPO in the near future.
HPL's paid-up equity was around Rs 1420 crore (Rs 14.2 billion), with the state government holding around 38 per cent in the outfit. TCG group held around 55 per cent in the outfit, through group companies like Chatterjee Petroleum India and Chatterjee Petroleum Mauritius.