Essar Oil secures Rs 5,000 crore bank credit for tax payment

Essar Oil has tied up with a consortium of 12 domestic banks to provide a credit line of up to Rs 5,000 crore to meet its sales tax liability of Rs 6,300 crore in Gujarat

Written by ENS Economic Bureau | Mumbai | Published: July 24, 2012 1:22:36 am

Essar Oil has tied up with a consortium of 12 domestic banks to provide a credit line of up to Rs 5,000 crore to meet its sales tax liability of Rs 6,300 crore in Gujarat. 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 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 Rs 6,169 crore,” the company said in a statement. The details of the credit line such as the tenor,pricing etc,could not be obtained. The company has already paid Rs 1,000 crore as first instalment to Gujarat as directed by the Supreme Court last week.

Essar Oil managing director and CEO 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.”

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