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Cement firms’ operating profit may fall due to hike in petcoke import duty: Ind-Ra

20 Dec 2017 Evaluate

India Ratings and Research (Ind-Ra) in its latest report has said that the operating profits of cement companies in India, which use a high proportion of pet coke, may fall by around one percent, following the government’s decision to hike the import duty on petcoke from the current 2.5 percent to 10 percent. Besides, it pointed out that the increase in import duty will also result in a rise in power and fuel cost per metric tonne to Rs 5-7 per bag.

The rating agency has noted that the hike in import duty was announced after the Supreme Court decided to lift the ban on usage of pet coke on December 13, 2017, giving some relief to the cement companies. It also noted that the Supreme Court allowed the cement industry to use petroleum coke as a feedstock which had been banned last month in a bid to clean up the air pollution. Adding further, it said that while issuing the exemption order for cement and limestone industries, the apex court asked the government to frame guidelines for the use of petcoke.

Ind-Ra further said that the cement manufacturers may resort to coal imports due to low domestic availability. It noted that cement manufacturers prefer using pet coke, as it contains high calorific value (7,500-8,500Kcal/kg), to non-coking coal (2,200-7,000Kcal/kg). Total pet coke consumption in India rose by 34 percent in October 2017 to 2 million metric tonnes as compared with the level recorded for October 2015. Of the total pet coke consumed in the country during FY17-1HFY18, about 50 percent was sourced domestically and the remaining through imports. According to its assessment, 35 percent of the total pet coke imports were consumed by the cement industry.

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