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Wednesday, Nov 27, 2002

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HPL may ask for extension of Nov 30 deadline

Our Bureau

KOLKATA, Nov. 26

WITH the beleaguered Haldia Petrochemicals Ltd (HPL) being caught in a Catch 22 type situation, efforts are on to approach the financial institutions and banks for an extension of the deadline given by them for injection of Rs 500 crore by November 30.

This was one of the conditions set by HPL's lenders when they gave their `in principle' nod to the company's debt recast proposal in September. The proposal still remains on paper and HPL's hopes of GAIL infusing Rs 200 crore of equity into the company will have to wait till the board of the PSU takes a decision on this issue.

The GAIL Chairman has gone on record to say that the company will participate in HPL's equity only after its debt recast is completed and the debt-equity ratio comes down to healthy levels.

"The GAIL meeting is crucial and we will take a final decision on asking the FIs for an extension of the deadline only after that,'' senior HPL sources told Business Line.

As per the condition, HPL was slated to bring in Rs 500 crore by way of equity and quasi-equity by November, 2002. This was supposed to come through the equity infusion by GAIL and through its proposed marketing tie up with HPL.

HPL owes over Rs 4,000 crore to the FIs and it has already missed two of its long-term debt repayments schedules, which translate to a payout of Rs 100 crore every quarter. HPL incurred a net loss of Rs 501.55 crore in 2001-02 and has defaulted on these payments since June 2002.

Although cash crunch has affected HPL's ability to buy its raw materials and maintain a high capacity utilisation, its products have generated good market response and it is now the second largest player in the polymer market after Reliance Industries Ltd, with a market share of around 23 per cent sources said.

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