Haldia Petrochemicals to benefit from import duty scrap on naphtha

28 Jun '11

2 min read

Haldia Petrochemicals Ltd (HPL) is expected to benefit the most due to the Centre's decision to scrap the existing 5 percent import duty on naphtha.

The Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee has decided to scrap the five percent import duty to boost the imports of naphtha. The Government expects to offset the revenue loss by the excise duty from higher production.

The decision came after the West Bengal Minister for Industries, Mr. Partha Chatterjee wrote to the Centre asking for the removal of the duty. HPL is the largest industrial venture in West Bengal.

Since naphtha is one of the main raw materials for HPL, the company is expected to save Rs 350 crore annually due to the removal of the duty. However, the company is likely to save only about Rs 250 crore this financial year, as the decision has come in the second quarter.

This amount, however, will not be enough to help the company achieve break even this year, especially in view of the company's poor performance in the first quarter of this fiscal. During the first quarter, HPL may accrue loss of around Rs 150-200 crore due to slowdown in China.

In the last two months, HPL has been selling its final products at prices below its cost price. While the price of naphtha has increased by 39 percent since June last year, the net realization of the company from polymer and chemicals has risen by only 18 percent during the same period.

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