Haldia Petrochemicals Ltd (HPL), through several representations, has pleaded with the Union Finance Ministry to withdraw the 5% import duty on naphtha levied in the Union Budget this year. The company is hopeful that the Finance Ministry will take a positive view to their appeals.
A 5% import duty was proposed to be levied in India's Union Budget this year. HPL is India's only petrochemicals company that will be directly affected by the imposition of the levy. HPL sources over 90% of its naphtha requirement from imports. HPL's naphtha requirements will increase once it completes its expansion plan that is currently underway. GAIL uses gas cracker technology and Reliance has its own source of naphtha supply, hence they are unlikely to be affected by this levy.
Petrochem companies all across the globe are already battling with high naphtha prices. Within a span of one year, naphtha prices have shot up by 43% from US$625/ton to US$894/ton.
HPL will be able to retain its sales turnover achieved during 2007-08, but given the rise in naphtha prices and a duty levy, profitability will plummet.