<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Haldia Petrochemicals Limited (HPL) has suffered losses after five years of continuous profit.
The company, in which the state government claims majority ownership, has reported a loss of Rs 275 crore in 2008-09 (unaudited) compared with a profit of Rs 279 crore a year ago.
The imposition of a 5 per cent import duty on naphtha, the primary raw material, in the 2008 budget, and a drastic fall in polymer prices have hit profitability.
The HPL management could do little to check the loss and trade union activity added to the plight of the company.
Haldia Petro’s loss has come at a time when Bengal’s industrial fortunes have taken a tumble following the violence in Nandigram, exit of the Tata Nano project and downturn in the global economy.
The company had last reported a loss in 2002-03 when HPL was on the verge of approaching the Board for Industrial and Financial Reconstruction. Debt restructuring by lenders had helped the company to turn around then.
During the last fiscal, net earning before interest, depreciation, tax and amortisation (EBIDTA) — an indicator of a company’s health — had sunk to its lowest in five years to Rs 270 crore from Rs 933 crore in 2007-08.
HPL’s two main promoters, the Bengal government and The Chatterjee Group, continued to bicker over the ownership issue during the period.
A Supreme Court hearing may start soon after years of litigation at Calcutta High Court and the Company Law Board.
The HPL management, which has the complete support of the state government, had projected a loss of Rs 140 crore a year ago when the then finance minister P. Chidambaram ignored hectic lobbying by Left MPs to withdraw the import duty on naphtha.
The company was confident of posting profits after the first quarter as product prices rose.
However, all calculations went haywire when polymer prices crashed to Rs 40 a kg on an average from a high of Rs 95 a kg.
Naphtha prices also dipped to $600 a tonne from a peak of $2,000 a tonne within a span of four to five months.
In the first nine months of 2008-09, HPL suffered a loss of around Rs 470 crore. It managed to report a profit of Rs 190 crore in the fourth quarter, backed by inventory gains. In the fourth quarter of 2007-08, it had clocked a profit of Rs 43 crore .
Insiders said the management had failed to live up to the tough operating environment.
For instance, it continued to operate at high capacities despite the severe bearish trend in the market to use up the raw materials procured at a high cost.
Expansion Delayed
Project Supermax, an HPL expansion project to increase capacity by 30 per cent, is also in the doldrums.
It is running two years behind schedule, while the cost has doubled from Rs 675 crore to Rs 1,500 crore now.
Had the capacity expansion been complete in late 2006, as was originally planned, the company would have been able to take advantage of the bullish business environment and made profits.
Earlier, it had considered funding the project internally but would now have to borrow because of worsening financial conditions.
The plant may have to shut down for two weeks for maintenance, which is long overdue, in the near future.
Insiders said the plant was on the verge of a closure a few weeks back because of a lack of overhaul.
The management had originally planned to coincide this with the Supermax when the plant would have to be closed for two months.
The company will now lose out 14 days of extra production as the maintenance shutdown will not coincide with Supermax, which will take place only after the monsoon season. As a result, the performance of the company will get affected in this fiscal.
Courtesy: The Telegraph