Business Today Net Special

The HPL Progress Report

One year into operations, Haldia Petrochemicals' Rs 5,170-crore facility seems to have overcome some teething trouble. Can its promoter Purnendu Chatterjee make it viable too.

By Debojyoti Chatterjee

Richard B. Saldanha, Managing Director of Haldia Petrochemicals Limited (HPL) , is under no illusion. He is well aware of the bumpy ride ahead and willing to take it on with grit and determination. The Rs 5,170-crore petrochemical complex has just completed a year and not a very smooth one at that. The most talked about industrial project in West Bengal is now finally showing signs of having put the initial turbulence behind. For one, the promoters have stropped scrapping.

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Things started rolling once the new Left Front Government made it up with the HPL promoter Purnendu Chatterjee of The Chatterjee Group. Until six month ago, there was plenty of mud slinging all around. Indian Oil Corp (IOC) has been identified as the new partner and due diligence is on to facilitate IOC's entry into HPL.

The ownership aspect in place, it's time for HPL to start becoming commercially viable. And, that's what Saldanha's prime concern is. A Rs 1,400-crore turnover and 400,000 metric tonnes of chemicals and polymer sales may be seen as a reasonable beginning. Still conditions aren't anything to rave about the future.

Though the company expects to clock a growth in the region of 20 per cent in the current year, it is only too aware of the pressure on its margins. Of course things may change once the plant begins to make use of its complete capacity and starts full-fledged commercial production. To this end the company is relying a great deal on its branding and marketing exercise. The decision to brand its polymer products, Halene, has helped easy identification with consumers. But making it big in the marketplace depends a lot on the future trends in the petrochemical industry.

One of the things that will determine the profitability of HPL in the coming years is the growth of the downstream sector in the West Bengal and adjoining states. Downstream units and users of polymers are still few and far between in West Bengal. Though the company can tap the East Asian markets, the lack of domestic consumers will be a constraint. For the moment however, Haldia is ready to make the right start. A project which has fuelled a fair number of dreams in the region, HPL has to make quick moves. A hard landing will have HPL and others fasten their seat belts. A soft landing, on the other hand will certainly give them some leeway. HPL is a test case for a greenfield petrochemical venture in Eastern India. The time has now come to prove itself.

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