Hit by the Supreme Court’s (SC) decision on the sales tax deferment that resulted in an impact of $970 million (Rs 4,365 crore), Essar Energy on Monday announced a 65% loss in its net profit at $87 million (Rs 3,915 crore) for 2011 (Essar Energy’s financial year is from January to December) as against $248 million in the previous year.
The court decision in January ruled out the eligibility of Essar’s Vadinar refinery for the Gujarat government’s sales tax deferral scheme. The move resulted in an impact of $970 million on the company.
“We were clearly disappointed that the Supreme Court set aside an earlier decision of the Gujarat high court, which enabled us to benefit from a sales tax deferment scheme,” said Naresh Nayyar, CEO, Essar Energy. “We are seeking a review of this decision. We are also in discussions with the Gujarat government with regard to a suitable repayment schedule. Simultaneously, we are taking steps to ensure that the group has sufficient access to sources of funding and liquidity.”
Full-year earnings stood at $624.8 million, compared with $696.5 million in 2010.
The company said it is in the process of moving its year end to March and will report a final set of results later this year covering the 15 months to end March.
Nayyar said Essar Energy has $380 million available, which was set aside through a special third party vehicle, Essar House. “Essar Oil has announced earlier this month and was planning to raise $600 million through an issue of new equity on the BSE. Also we are confident about raising a further debt facility,” he added.