Haldia Petrochemicals Ltd. estimates a 30% increase in naphtha consumption in the fiscal 2009/10, upon successful completion of capacity expansion. Haldia plans to increase plant capacity by 30% at an investment outlay of Rs 9 billion. Work on the expansion is expected to commence for 75 days in mid-October, resulting in a 20% cut in naphtha imports for the fiscal. Haldia currently imports 1.2 mln tpa of naphtha, procures 300,000 tons from Indian Oil Corp, and the rest from other domestic suppliers. Lower quality naphtha restricts increasing buying from domestic market.
Naphtha prices have spiked by almost 40% in 2007-08. As per India’s Union Budget 2008, a new 5% import tax has been levied on naphtha. Non-availability of gas that can be used to produce polymers in eastern India prohibits the firm to shift to gas-based production system. This will further hit the company’s bottom line. Haldia reported net profit of Rs 5.45 bln on sales of Rs 83 bln in 2006-07.