HPL to wait for the viability of unit to be restored before making future investments

08-Jul-11

Despite financial benefits gained by Haldia Petrochemicals Ltd (HPL) from the waiver of import duty on the naphtha it uses as feedstock, HPL will wait for the viability of its unit to be restored before making future investments, as per Economic Times. Under current market conditions, though naphtha prices had increased by 39%, product prices had gone up by only 18%, leaving a differential of 21%- exerting tremendous pressure on margins and resulting in substantial monthly losses. In the first quarter alone, the company incurred a loss of Rs 247 crore. As part of its future plans, HPL intends to invest Rs 200 crore for manufacturing better-margin products which had an IRR (internal rate of return) of 35%, leading to a payback period of two years. The company also plans a total investment of Rs 4,000 crore for producing 12 to 13 grades of new polymer products.