Coughs Up Rs 2490 Cr By Way Of Duties

Textiles-to-petrochemicals megacorp Reliance has paid a hefty Rs 2490 crore to the government by way of taxes and duties during 1996-97.

This payout is almost twice the companys reported profit after tax.

The sum of taxes and duties paid out during the last fiscal is an increase of 11 per cent over the payments made the previous year amounting to Rs 2234 crore.

The payments to the exchequer this year includes a first-time direct corporate tax payment of Rs 45 crore under the minimum alternate tax. The company says various taxes and duties form one of the largest elements in the companys cost structure.

 

While bulk of Reliances contribution to the exchequer is by way of custom and excise, the total amount of such duties and taxes paid by the company has gone up over the years even as the rates of custom and excise duties have declined in absolute terms.

This is so because there has been a continuous increase in the companys production.

Reliance has also managed to save considerable foreign exchange amounting to around Rs 4450 crore ($1239 million).

This is more than 50 per cent higher than the savings of Rs 2783 crore achieved during 1995-96.

During the year, the company also entered into some landmark transactions to raise funds. Reliance became Asias first corporate to issue bonds in the US debt markets with maturities of 50 and 100 years.

The company had also issued bonds with 20 and 30 year maturities. Five Yankee bond issues were launched by the company during the year, totaling $614 million with maturities right across the yield curve of 10 to 100 years.

Global rating agencies, Moodys and National Association of Insurance Commissioners (NAIC) retained their ratings on Reliance during the year while Standard & Poors (S&P) upgraded its rating from ``BB+ stable outlook to ``BB+ positive outlook.

Reliance changed its method of calculating depreciation during the year from the Straight Line Method (SLM) to Written Down Value (WDV) method in respect of certain assets.

The company feels that had there been no such change, the profits for the year would have been higher by Rs 66 crore.

The post tax profits of the company for the last fiscal was Rs 1323 crore.