Supreme court has banned the import of Pet Coke. Rain Industries won’t be able to import the pet coke. Does anyone know what is the impact?
Yes, and No, mostly No impact!
Not sure about this. I found this circ on ET
“It is quite clear that a consensus decision has been taken that the use of imported pet
coke all over the country may be permitted only in the following industries: Cement,
Lime Kiln, Calcium Carbide and Gasification. It is statedbf4022e0-6030-4c67-b7ff-181eb307431f.pdf (140.5 KB)
that this would be in
compliance with the WTO norms and these industries may be permitted to import pet
coke for use as a feedstock or in the manufacturing process and not as a fuel.”
Yes, that’s where I am also getting confuse. Rain BSE announcement says…
The Company’s Wholly Owned Subsidiary RAIN CII Carbon (Vizag) Limited, India uses Green
Petroleum Coke as “Feedstock” for producing “Calcined Petroleum Coke” used by the aluminium
smelters, steel manufacturers and other players. Neither the Company’s Subsidiary nor its customers use
“Green Petroleum Coke” or “Calcined Petroleum Coke” as “Fuel” or as a substitute to Coal. Further,
RAIN CII Carbon (Vizag) Limited fully complies with the best environmental standards. Accordingly,
the Company’s Subsidiary RAIN CII Carbon (Vizag) Limited would approach the Hon’ble Supreme
Court of India to seek a clarification regarding import of Pet Coke.
Source: Bseindia.com
Why would Rain approach Supreme Court if no impact?
Also the below video on Youtube explains Rain Industries: Impact of Supreme Court judgment on Pet Coke Ban. As per the author, Rain is lobbying to get the exemption and won’t be able to import PET Coke until Supreme court exempt the carbon industry.
Unlike Cement who uses Pet coke as fuel, Rain uses Pet coke as a feedstock so very suprise to see import ban for them.
What’s the truth??
I feel, as mentioned in the Court order as well as Rain/Goa carbon clarification submitted to exchanges, where ever Pet Coke is being used as feed stock and not as a substitute for coal to be used as fuel, import ban may not be applied. And thats the reason, both the companies are seeking clarification from Supreme Court. And, if I remember correctly, clarification of usage of petcoke in Aluminum industry to be submitted by October 2018 after conducting a detailed study. We can have more clarity on Aug 14 in conf call.
Disc- Invested from lower levels and added further in last 30 days.
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Analyst / Investors Call on the Unaudited Financial Results for the Second Quarter ended June 30, 2018 is scheduled on Tuesday, the August 14, 2018 at 17:30 Hrs (IST).
The results look good. Would request the experts for their views
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Mutual Fund holding of Rain Industries has shown a decline in the month of July’18
Source : https://www.rupeevest.com/Mutual-Fund-Holdings/100339
Historically, when MFs have sold, Rain price has shot up. So good for all small share holders…
The difference is 99 shares! 
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First look commentary, definitely non-expert, sorry!
YoY:
Topline growth = 41%, even after 50 Cr decrease in non-operating income!
PBT and PAT = almost 100% increase!
Margins grow of course, since no exceptionals logged!
A general comment on Carbon impact of aluminium (AL) business.
How do you think Iron and steel are produced, in blast furnaces?
Imagine how polluting such industries are.
Copper? think Sterlite in thoothkudi.
Selected Short List of such industries are discussed here:
https://www.sciencedirect.com/science/article/pii/S0306261915014464
By contrast, ALCAN, biggest AL producer has aimed to get carbon-neutral AL, by:
-
green sourced energy only since electricity is biggest cost of production. This is already the case at production facilities, 95% are sited next to power plants. Hindalco oldest plant at Renukoot an example, using hydropower.
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Advantage of using AL over heavier metals, reduces the overall impact. Think transport! Already it is impossible to meet emission control rules in developed countries without AL body cars! Also to improve battery range for electric cars.
Elysis process is a small joke. Apple holds a ~5% minor stake only. People have tried this before, like for decades now. It is expensive, OK to make phone parts that too good publicity stunt for Apple.
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Rain Industries Limited Earnings Presentation on Unaudited Financial Results for the second quarter ended on June 30, 2018
Press Release on the Unaudited Financial Results (Standalone, Consolidated and Segment) for the second quarter ended on June 30, 2018
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Anyone attended investor conference? If can you please share the details?
I have found this summary of yesterday conf call on net… I haven’t attended the call…But, very nicely summarized by the author (twitter handle: elliotwave03)…
Rain Industries - Q2CY18 Concall Summary.pdf (214.3 KB)
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Pet coke ban :- https://www.bseindia.com/xml-data/corpfiling/AttachLive/8b1f03ea-8f3d-4bfb-9d52-929b6e59fcf6.pdf
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My FirstValuePickr Presentation presented in Bangalore forum yesterday . This forum has been a great inspiration .
I split the shared presentation into two parts because of size constraints,
Thank you …Team ValuePickr.
RainIndPPtV2-PART2.pptx (2.1 MB)
RainIndPPtV2-PART1.pptx (3.0 MB)
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Thank you for posting this. I had tried to put my thoughts down about pet coke ban and its impact on Rain a few months ago. Reading this letter from the company - has confused me. It would now appear that the Supreme Court is actually going to allow cement companies to use petcoke (fuel grade) and Rain concerned/needs clarification as to whether they can import green pet coke and use it AS FEEDSTOCK for their calcining plant. Until these matters are clarified, there is going to be a lot of uncertainty. Disc: Invested from lower levels
More eloborate explanation on pet coke ban
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Spoke to Rain Management… Regarding Pet coke Ban…
If it is not imported it will affect Aluminium and Steel industry as a whole . The entire domestic production(NALCO/HINDALCO n others ) would come to a still without pet coke . Most of domestic demand is imported from US , this applies to all varieties of Pet Coke.
This ban is applicable from August 17th . Rain has 3 months of inventory with them and i a assume it should be similar for other companies as well. Whichever inventory is in Pipeline till August 17th that will still be allowed apart from the 3 months inventory which is in stock .
So if the BAN has to stay , the industries both Steel(less impact) and Aluminium (No alternative but to import aluminium or anodes which is unlikely)
Now Coming to INDIA vizag operations contributes abt 20-25% OF world CPC production . The revenue from CPC alone is abt 25-30% of total revenue , so in a worst case scenario , we are looking at loss of sales of 12000(cr) .25.25 = 750 crore of sales in a year (assuming 12000 crore annual sales) which is 6% of sales
with 20 % margin from Carbon products …
Ebita could be impacted by 150 crores
so net profit would be impact by 150*.66 (as 34 % is their tax rate) = 99 crores .
Since 2 quarter are already done and there is enough inventory for quarter 3 , the only impact could be on Q4.
So the loss in profits at most would be 99/4 = 25 crores as it will only be reflected Q4 CY18
and
Yearly EPS would be impacted by 2.5% with a very conservative assumption of 1000 Crores profit.
So instead of 32 Rupees EPS(conservative) for CY18 , worst case scenario is we are looking at 31.2 rupees EPS.
Cutting long story short,
In all Likelihood , the ban looks like error of omission to miss out on other industries which use it as a feed stock .
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