Essar Oil announces new credit facility to meet sales tax liability
23 July 2012
Essar Oil has announced having tied up a new credit facility from domestic banks to provide a line of credit line up to Rs5,000 crore to meet its sales tax liability of Rs6,169 crore, to the Gujarat government.
The Gujarat state government wants that the company discharge its sales tax liability stemming from delayed commissioning of its Vadinar refinery under the sales tax deferral scheme introduced in 1995. Last month, the Gujarat government seized three bank accounts of the company, in a bid to speed up recovery.
According to Essar Oil, it continued to pursue the matter of repayment schedule of its sales tax liability both legally and with the Gujarat government. "Essar Oil is confident that with this facility tied up it will be in a position to meet its entire payment obligations," the company said in a statement.
According to Lalit Gupta, MD & CEO, Essar Oil, the new loan facility would enable EOL to meet its sales tax liability. He said the company's lenders had continued to be very supportive of the business, which remained well placed given the demand for high value fuels both in India and internationally.
"With its benchmark low operating costs and enhanced scale and complexity, Vadinar is expected to deliver significantly enhanced margins and cash flow generation in future," said Essar.
The company statement said, the completion of the Vadinar refinery phase 1 expansion and the early completion of the additional optimisation project at Vadinar complete the scheduled capital expenditure programme for the refinery.