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Duty waiver can turn around HPL: MD
June, 11th 2011

Waiver of customs duty on naphtha and levy and retention of sales tax on motor spirit would help Haldia Petrochemicals Limited (HPL) to turn around from its present financial state, a top company official said.

"We have approached both the Centre and the state to deal with the twin issues," newly-appointed Managing Director of HPL Partha Bhattacharya told PTI.

He said that as HPL was manufacturing motor spirit as a by-product from its petrochemical plant, the same was being sold to the oil companies.

Bhattacharya said that by virtue of this, HPL was classified as an oil company and the financial advantage of imposition of sales tax and subsequent retaining was withdrawn by the state government.

This had been a big blow to HPL, he said.

On the other hand, imposition of five per cent customs duty was also affecting the fortunes of the company as major portion of naphtha requirement of HPL was being met from imports.

"If both the Centre and the state are sensitive to present needs of HPL, then the company can surely turn around," he said.

Last financial year, the company suffered a loss of Rs 276 crore and the EBIDTA for 2011 May was negative.

For June also, the operating profit would also be negative, Bhattacharya said. Bhattacharya said that due to high prices of naphtha and low prices of the finished products, the margins were getting squeezed.

"It is a phenomenon world over," Bhattacharya said.

Bhattacharya said that although the realisation was low, sales turnover was rising.

While in the last financial year, the company's turnover was Rs 7,800 crore, this year it should touch Rs 10,000 crore, he said

Bhattacharya said that the recent expansion of HPL was ill-conceived. "The Supermax project was faulty. Something more should have been done before and after", he said.

On the ownership tussle between Purnendu Chatterjee and WBIDC, he said that it was expected to get resolved soon."Hearing in the Supreme Court is complete. An order is expected shortly".

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