Welspun Corp dwindles on provisional demand notice for Anjar plant

Welspun Corp (WCL) received a tax notice amounting to Rs 100.46 crore for its manufacturing unit at Anjar (Gujarat). The company has received this provisional demand notice from the Assistant Commissioner of Commercial Tax, Gandhidham for the period starting from February 01, 2014 and ending on September 30, 2015.

WCL is engaged in the business of production and coating of submerged arc welded pipes, hot rolled steel plates and coils, and power generation. The company offers a solution in line pipes with a capacity to manufacture longitudinal submerge-arc welded (LSAW), helical submerged arc welded (HSAW) and electric resistance welded (ERW) pipes. It also offers coating, bending and double jointing facilities. WCL's manufacturing facilities are located in India, the United States of America and Saudi Arabia.

WCL's provisional notice includes a tax amount of Rs 37.53 crore and interest & penalty amount of Rs 62.9 crore. Meanwhile, according to the company, it will contest a demand notice to appropriate forums in the next few days.

On the financial front, the company's consolidated tax expense stood at Rs 52.04 crore in H1FY16 while it witnessed tax benefit of Rs 67.81 crore during H1FY15. It has an annual bottom line of Rs 69 crore as of FY15. If WCL pays Rs 100.46 crore according to the provisional notice then its profit margins may contract during the current financial year. Its top line stood at Rs 8619 crore as of FY15. The company's bottom line decreased by a CAGR of 35.81 per cent during the last five years from Rs 633 crore in FY11 to Rs 69 crore in FY15.

WCL's share price declined by 3.86 per cent on bourses in early trades and is trading at Rs 106.5 on an intraday basis.