Companies & Sectors
Essar Oil secures Rs5,000 crore credit for its sales tax liability


Last week, Essar Oil told the Supreme Court that it would pay Gujarat the sales tax liability of Rs6,300 crore in instalments, the first of which will be deposited by 30th July  

Mumbai: Essar Oil on Monday said it tied up a new credit facility from a consortium of 12 domestic banks to provide a credit line of up to Rs5,000 crore to meet its sales tax liability of Rs6,300 crore, reports PTI.
The company continues to pursue the matter of repayment schedule of its sales tax liability both legally and with Gujarat.
Essar Oil is confident that with this facility it will be in a position to meet its entire payment obligations of Rs6,169 crore, the company said in a statement.
The company did not name the lenders but it has been learnt that the consortium is led by State Bank of India along with ICICI Bank, Bank of Baroda, Punjab National Bank, IDBI Bank, and Bank of India among others.
The details of the credit line such as the tenor, pricing etc could not be obtained.
The company has already paid Rs1,000 crore as first installment to Gujarat as directed by the Supreme Court last week.
Essar Oil managing director and chief executive Lalit Gupta said, "the new loan facility will enable us to meet the sales tax liability. Our lenders have continued to be very supportive of the business, which remains well placed given the demand for high value fuels both in the country and internationally." 
Despite the huge financial burden due to the tax case being lost, the company said, as previously announced, the completion of the Vadinar refinery phase-1 expansion and the early completion of the additional optimisation project at Vadinar are on course. Post expansion, Vadinar is expected to deliver significantly enhanced margins and cash flow generation in future to the company. 
On 17th July, Essar Oil had informed the Supreme Court that it would pay Gujarat the sales tax liability of Rs6,300 crore in instalments, the first of which will be deposited by 30th July.
Essar Oil had approached the apex court against the order of the Gujarat High Court which had refused any relief to it for making the payment in instalments.
The case pertains to the sales tax deferment benefits accorded by Gujarat to investors. The benefit given to Essar Oil was challenged in the High Court which directed recovery of dues and subsequently the company also lost the case in the Supreme Court.
The Supreme Court had in April refused to review its 17th January judgement which quashed the Gujarat High Court order allowing Essar Oil to pay Rs6,300 crore sales tax liability in deferred instalments and extended the time period of the state's tax incentive scheme.
The apex court had delivered the verdict on the petition by Gujarat challenging the 2008 high court order which had allowed Essar's plea on the issue. Following this on 10th July, Gujarat attached Essar Oil bank accounts to recover the dues.
Essar Oil had availed Gujarat's capital investment incentive to premier/prestigious unit scheme 1995-2000 for its Rs1,900-crore Vadinar refinery in Jamnagar district as a 100% export-oriented unit with a capacity of 9 million tonne per annum.



Anil Agashe

5 years ago

What non sense is this? Attach the assets of the company to recover the dues. Why should banks lend for clearing tax liability? What security is available for the lenders? Is it an unsecured loan? RBI needs to stop this transaction, let the Gujrath govt deal with the company under Sales Tax Act.

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Mahapanchayat demands CBI probe into Maruti violence


The Mahapanchayat that represented around 100 villages, said they do not have faith in the SIT and there want the CBI to probe the incident at Maruti Suzuki plant in Manesar

Manesar: Representatives of around 100 villages, who gathered at Dhana village for a Mahapanchayat, on Monday demanded an inquiry by the Central Bureau of Investigation (CBI) into the violence at Maruti Suzuki's plant last week in which one senior company official was killed and 100 injured, reports PTI.
"We don't have faith in the special investigation team. We demand a CBI inquiry to probe the incident," said former Gurgaon Zila Parishad Chairman Rao Abhay Yadav, who presided the Mahapanchayat.
"We demand that the culprits, who committed the crime must be brought to book and all the workers who were involved in it must be sacked," Yadav added.
As part of a six point agenda passed in the meeting, it was resolved to form a committee of the villages to look into the incident.
Last week, Haryana government had announced a special investigation team (SIT), headed by Assistant Commissioner of Police Ravinder Tomar, to probe the incident.
Today's Mahapanchayat, in which representatives of around 100 villages, including Aliyar, Dhana, Manesar, Kasan, Basskusla, Kankrola, Bangrola, Kho, Pukharpur, Naharpur, Mohammedpur, Farukh Nagar, Nawada and Wazirabad were present, expressed their support to Maruti and condemned the incident.
It was also attended by district BJP leaders Kamal Yadav and Mukesh Pahelwan, Congress member Ved Prakash Vidroi and Amina Sherwani, Gen Secy IMT Industrial Association Manesar.
Yadav said that in order to prevent such violence in future, village representatives must be involved while resolving disputes between company management and workers.
He also said that "not employing workers from villages around the plant" was one of the reasons for the violence as "local elders could have always guided them not to indulge in such acts".
The Mahapanchayat said outside influence, especially "that of communists", should not be allowed in the affairs of workers union in Maruti.
It sought an investigation on the way how VRS was granted to former union representatives, including Sonu Gujjar and Shiv Kumar, who had led strikes in Maruti Suzuki's plant here last year.
As many as 30 suspended workers, which included all the former office-bearers of Maruti Suzuki Employees' Union (MSEU), had left the firm after taking a severance package of Rs16 lakh each.


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