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A view of Haldia Petrochemicals (file picture)

Pratim Ranjan Bose

Kolkata, Oct. 13 The appreciation of Indian rupee against US dollar has proved costly to Haldia Petrochemicals.

According to the Managing Director and CEO, Mr Swapan Bhowmik, the company’s bottom line is hit by Rs 10-13 crore a month, compared to last fiscal, ever since the exchange rate tumbled in favour of rupee beginning this fiscal.

According to him, Haldia Petrochemicals sells its products in dollar denominated prices. The loss is registered due to translation of dollar denominated prices in Indian currency (for accounting purposes) and is net of the exchange gains on feedstock purchases.

Rupee appreciated by 330 paise from 43.05 a dollar on April 2 (the first working day of the fiscal) to 39.75 by the end of September and was ruling at 39.16 on October 12. The appreciation was the sharpest in April, when the domestic currency rose from 43.05 to 41.04 a dollar.

While Mr Bhowmik was silent on the total impact of such exchange rate fluctuation during the first half of 2007-08, simple arithmetic suggests that the company’s bottom line might have already taken a hit of anything in excess of Rs 60 crore.

The losses (on exchange rate) may move well over Rs 100 crore for the entire fiscal if rupee remains strong during the residual part of the year.

HPL recorded a net profit of Rs 584 crore during 2006-07.

The company has limited scope to increase the volume sales till the capacity is expanded from 520 kilo tonne a year (KTA) to 670 KTA during the next few months.

The plant is running higher than the designed capacity for the last two years.

Meanwhile, HPL is gearing up to finalise the proposed Greenfield capacity expansion plan.

“We will freeze the plan by January,” Mr Bhowmik said.

The new plant will expand the company’s product range and will be located within the existing plant premises in Haldia. “We are studying various models. The process is expected to be through by January,” he said.

The project is slated for commissioning in 2010.

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