See marginal impact on EPS, if DEPB is withdrawn: Cipla

Agency reports suggest that a Finance Ministry official has said the tax incentive scheme for exporters, duty entitlement pass book scheme (DEPB) will end on June 30, 2011.

In an interview with CNBC-TV18, S Radhakrishnan, CFO, Cipla says, DEPB related income in FY11 was Rs 60 crore and in FY12 it is likely to be around Rs 40-50 crore. He further says, the company will see marginal impact on earning per share (EPS), if the scheme is withdrawn. Below is a verbatim transcript of his interview with CNBC-TV18's Reema Tendulkar and Ekta Batra. Also watch the accompanying video. Q: Could you explain to us how exactly the DEPB scheme works for Cipla? A: This is an incentive scheme to neutralise the effect of levies and duties paid on inputs. Overall, it is about 5-6% incentive, which is given to the exporters, on the exports realisation. So that is how the scheme operates. Q: How exactly do you record this in terms of your P&L, where exactly does it show up? A: It shows as export incentives as other income. Q: How much was the DEPB related income in the year gone by in FY11? Also, how much is possibly that you could record in FY12? A: I think the export incentive income last year was about Rs 60 crore overall. Going forward, it will be in a similar range. But fortunately our SEZ is now operational. So, I think roughly about Rs 40-50 crore would be the total expectations of this income this year. Q: We do see it subsiding any which way because your SEZ comes into effect, is that correct? A: Yes, the mitigating factors are the SEZ, i.e. number one. Number two, obviously there are other options for the expert to claim advance license or duty drawbacks. So, that is why I think the exporters would have to look at the other schemes available as against the DEPB to mitigate the damage in terms of quarters there. But I believe that the government is likely to continue or give atleast some time to people to get to shift to other arrangements and that is what one is hoping for. Q: What are the other arrangements someone could substitute this for, if for example the DEPB scheme is withdrawn completely? A: I think the other arrangement is the advanced license scheme where you are allowed to import duty free in first place. That is one scheme. Obviously, for EoU and SEZ, you don