State government move of getting Centre to scrap import duty on naphtha to boost Haldia bottomline by Rs 350 pa

Central Government has decided to eliminate the 5% import duty on crude oil and petro products including naphtha. This is a result of the efforts of the newly elected Mamata Banerjee government to get the Centre to scrap import duty on naphtha. This move will help Haldia Petrochemicals save Rs 350 crore annually. This financial year, HPL is expected to gain only around Rs 250 crore from the move since the decision has come in Q2. However, in view of company performance in Q1-11, even this may not help the company break even this year. HPL’s losses in the first three months may come to Rs 150-200 crore because of the slowdown in China. The price of naphtha, the main raw material for the company, has risen by 39% in the past 12 months whereas the net realisation from its products, polymer and chemicals, has gone up by only 18%. In the past two months, HPL has been selling at prices lower than the cost price.
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