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      Seeks HPL lifeline Mitra meets Jaitley

Jaitley took time out of his busy Parliament schedule to give Mitra a patient hearing. Sources in the finance ministry said the meeting was "positive". Mitra also called on Union commerce minister Nirmala Sitharaman. HPL had obtained an advance licence for importing naphtha at zero duty, under which it is bound to meet its %export obligations. It has been seeking more time to do so, but the commerce ministry has turned down its plea.

Mitra pressed the panic button after the Directorate of Revenue Intelligence (DRI) slapped a fine of Rs 1250 crore on HPL owing to non-compliance of export obligation in 2013-14. The amount along with interest and penalty has now added up to Rs 2750 crore.

The policy relaxation committee (PRC) of the Union commerce ministry had earlier turned down HPL's plea for extra time.

 

Mitra and the central ministers explored different possibilities to bail HPL out, sources close to the development said. "It appears both sides are eager to arrive at a solution. At least, the Centre is not just citing the rule book," an official said.

HPL officials point out that if it shuts down in trying to cough up the Rs 2,700crore fine, then the Centre itself would lose Rs 3,000 crore in excise revenue. "Owing to stable and low price of naphtha and good demand of the products, HPL is doing really well on the revenue front. It is also making profit now. The annual excise bill of the company will be nothing less than Rs 3,000 crore," an official said. The company has also argued that banks have an exposure of over Rs 5,000 crore in HPL. This includes term loan as well as working capital. State Bank of India has recently sanctioned a fresh working capital to HPL so that the company can utilize its idle capacity.

 

Besides, the officials argued that HPL is stepping up exports to South East Asia and other countries. A source close to the development said HPL has already exported 80% of its obligation. According to the source, HPL has been able to step up exports following higher production volume. It is now operating at 95% capacity. "The remaining 20% can be exported in the next two-three years. We only need extension of the time frame to fulfill the export obligation. Policy allows for such relaxation," an official pointed out.