Kolkata: A week ago, Partha S. Bhattacharyya resigned as managing director of Haldia Petrochemicals Ltd (HPL) after the West Bengal government, one of the firm’s co-promoters, stepped up efforts to seize management control.
In his 13-month stint, the former Coal India Ltd (CIL) chairman, who was handpicked for the job by Purnendu Chatterjee, the other co-promoter of HPL, led a revamp of the plant that was stricken by breakdowns because of a botched capacity expansion.
Coordination woes: Bhattacharyya says it became increasingly difficult to build a consensus among the principle stakeholders on the steps required to be taken to pull HPL out of the ongoing crisis. By Indranil Bhoumik/Mint
He managed to keep HPL afloat despite shrinking working capital and mounting losses, but had to leave the company amid daunting challenges—its accumulated losses have run up to Rs 1,900 crore and it is currently indebted to the tune of Rs 4,300 crore.
In his first interview after he resigned as HPL’s managing director, Bhattacharyya said he could see light at the end of the tunnel and things could look up for the firm if lenders agree to back it through these difficult times. Edited excerpts:
Were you surprised by last week’s turn of events?
For the past few weeks, I was thinking of resigning, and the 19 June board meeting presented an opportunity to do so.
What led you to resign?
It was becoming increasingly difficult to build a consensus among the principle stakeholders on the steps that are required to be taken to pull HPL out of the ongoing crisis. I am happy that they let me go the same day—it would have been difficult to carry on if I was asked to serve notice as required by the contract of employment.
In the light of improving market conditions—naphtha prices are falling while polymer prices have remained relatively firmer—I had presented a business plan for HPL’s turnaround at the 19 June board meeting. There is a glimmer of hope—HPL, in my mind, cannot afford to miss this opportunity to make some money. The business plan also envisaged certain tangible measures to cut costs and to add value.
But even as I was preparing the business plan and thinking of ways to turn HPL around, I was increasingly feeling that I should stand down to be replaced by a nominee of the state government, which is currently in control of the company. In hindsight, I feel what happened was inevitable.
I am not surprised by the choice of a retired government officer as my successor. At one point, I myself tried to seek a successor from among government officials who would be acceptable to both the state government and Purnendu Chatterjee.
How did Purnendu Chatterjee react to your decision?
He was visibly unhappy but there was no way I could carry on.
After a dream run at CIL, what went wrong at HPL?
As an executive you need two things to achieve anything big for your company: one, the support of all stakeholders—employees, shareholders, lenders—in your pursuits, and two, the ability to build a consensus if there was any disagreement among them. CIL’s initial public offering (IPO) of shares wouldn’t have been so successful unless I could get everyone in the Union government, including the finance minister, to help.
The trade unions opposed CIL’s share sale, but they didn’t do anything to disrupt the IPO.
The finance minister intervened quickly and made sure that the agitation against the IPO didn’t go out of hand.
Even the environment ministry, which hasn’t always dealt kindly with CIL’s problems, did its bit to help the IPO.
At HPL, it was a completely different story. The two principle promoters couldn’t sort out their differences over ownership and management control and continue to fight each other in courts. In that situation it wasn’t possible to build a consensus between them on how to take the company forward.
Didn’t you envisage this situation at the time of joining HPL?
When I retired from CIL, I had decided not to join any company I had dealt with as CIL chairman.
Though there were many offers, I didn’t consider any from mining and power companies because all of them had dealt with CIL in some way or the other.
HPL, on the other hand, appeared to be an interesting challenge when Purnendu Chatterjee, a friend for years, asked me to join the company as managing director. Also, it was easy to get clearance from the government for this job—I got it in 17 days!
But most importantly, I thought the dispute between the promoters would end one way or the other with the Supreme Court judgement—when I joined it was just a matter of time before the court announced its verdict.
But I was wrong. The verdict led to more complications.
What lies ahead for HPL?
Market conditions have improved and HPL should begin to operate profitably provided lenders are supportive. But clearly in the long run, HPL needs backward linkage with a naphtha source.
This could be achieved either by way of a stake sale to a naphtha producer such as MRPL (Mangalore Refinery and Petrochemicals Ltd) and Indian Oil Corp. Ltd or by getting into long-term contract manufacturing pacts with global trading houses that can supply naphtha and would use a part of HPL’s capacity to convert it into polymers for a remunerative fee.
Have you decided on your next assignment?
I want to take it easy for the next two months to give myself time till August to decide what I want to do next.
At this moment, I am not sure whether to take another executive post. I wish going forward I have more time for myself and my family than I have had in the past.