5 consecutive years of profit at Haldia Petrochemicals ends in losses

13-May-09

Haldia Petrochemicals Limited (HPL) has reported a loss of Rs 275 crore in 2008-09 (unaudited) as compared to a profit of Rs 279 crore a year ago. HPL has suffered its first losses after five consecutive years of profits, mainly due to a 5% import duty imposed on naphtha in the 2008 budget, coupled with deteriorating polymer prices that have hit profitability. The situation was further aggravated by trade union activity. During the last fiscal, net earning before interest, depreciation, tax and amortisation (EBIDTA) had sunk to its lowest in five years to Rs 270 crore from Rs 933 crore in 2007-08. In the first nine months of 2008-09, HPL suffered a loss of around Rs 470 crore. The company reported a profit of Rs 190 crore in Q4, backed by inventory gains. Project Supermax, an project to increase capacity by 30% has also been stalled. Already behind schedule by two years, project cost has doubled from Rs 675 crore to Rs 1,500 crore. Earlier, the company had considered funding the project internally but would now have to borrow because of worsening financial conditions.Additionally, HPL will now lose out 14 days of production as its maintenance shutdown will not coincide with Supermax, which will take place only after the monsoon season. As a result, the performance of the company will get affected in this fiscal.