Kolkata: The West Bengal government on Tuesday seized the highest executive post at Haldia Petrochemicals Ltd (HPL), appointing retired bureaucrat Sumantra Chowdhury as the managing director to replace Partha S. Bhattacharyya, who stepped down in the midst of a board meeting and was allowed to leave immediately. Bhattacharyya’s contract required him to serve a three-month notice period.
The state government, which enjoys the backing of some directors representing financial institutions, had decided on Bhattacharyya’s successor in advance. When he resigned at Tuesday’s board meeting, his obligation to serve notice was waived. Purnendu Chatterjee, one of the firm’s co-founders and its vice-chairman, walked out of the board meeting, citing other engagements.
Voicing dissent: Purnendu Chatterjee, Haldia’s vice-chairman, walks out from the firm’s board meeting on Tuesday. Photo: Indranil Bhoumik/Mint
“I am shocked by this set-up job,” Chatterjee said, refusing to make any further comments on Tuesday’s turn of events.
HPL’s co-founders, The Chatterjee Group (TCG) and the West Bengal government, have been fighting legal battles over management control of the firm for the past seven years. They own 41% and 40%, respectively, in HPL, which amid mounting losses has lately had to scale back production to 50-55% of peak capacity for want of working capital.
The legal battle is likely to intensify following Tuesday’s development with which the state government has extended its control over the day-to-day management of HPL. At stake, however, is HPL’s existence, which, according to its outgoing managing director, will not survive another protracted legal battle between the promoters.
Bhattacharyya remained incommunicado following Tuesday’s board meeting. He told journalists while leaving the board meeting that his dues had been settled.
In a related development, Alapan Bandyopadhyay, West Bengal’s newly appointed commerce and industries secretary, was on Tuesday inducted on HPL’s board as an ex-officio director.
Through an elaborate search process, in which both TCG and the state government participated, Chatterjee had handpicked Bhattacharyya as HPL’s managing director in early 2011 after he retired as the chairman and managing director of Coal India Ltd.
TCG was kept out of the selection process this time—when Bhattacharyya’s successor was named at Tuesday’s board meeting, Chatterjee had already left.
Sixty-one-year-old Chowdhury, who retired last year as additional chief secretary of West Bengal, was appointed managing director by HPL’s board, according to Partha Chatterjee, the firm’s chairman and West Bengal’s commerce and industries minister, when asked about the selection process. “The board made the appointment—I didn’t,” he said. “Bhattacharyya was looking to leave for a long time.”
In a similar boardroom coup in March, Partha Chatterjee with the support of the representatives of HPL’s lenders, seized the chairman’s post, ousting Purnendu Chatterjee and reversing last year’s decision to give him greater freedom in reviving the firm.
On Tuesday, Purnendu Chatterjee vehemently opposed the state government’s move to remove Bhattacharyya, but he gave up and left the meeting when he realized that the state government had made up its mind, according an HPL director who represents one of the firm’s lenders. He did not want to be identified.
“It is unfair to blame us (the nominees of financial institutions) for everything going wrong at HPL,” he said. “We said our bit in today’s meeting.” Though opposed by some directors, there was no voting on Chowdhury’s appointment as the new managing director, he added.
For months, Bhattacharyya was at the “receiving end of an uneasy relationship” with the state government, widely seen as Purnendu Chatterjee’s man, according to a key HPL official, who, too, declined to be named. Bhattacharyya had written to the board “months ago”, indicating his preparedness to step down but carried on in the interest of the company and its employees, making “a last-ditch effort” to keep HPL afloat, this person added.
Though selected for the job by Purnendu Chatterjee, he was lately trying to get public sector companies such as Mangalore Refinery and Petrochemicals Ltd to take an equity interest in HPL, much against the wish of TCG.
“He even had some disagreements with Purnendu Chatterjee on this issue, but held firmly in his mind that HPL had no future unless integrated with a naphtha producer,” said the HPL official, adding that Bhattacharyya’s exit is a “serious setback” to hopes of rapprochement between the firm’s sparring co-promoters.