Goa Carbon posted an extremely weak set of Q4 earnings owing to poor raw material availability and some plant shutdowns. Chairman Shrinivas Dempo said, “The Bilaspur plant shutdown was a planned maintenance shutdown. It is also a very small plant as compared to our total tonnage. It hardly contributes to about 15 percent to our annual production capacity.”
In terms of the poor performance of the company in Q4FY19, he added, “the quarter was a very challenging one for us. We did have a very challenging year last year when Supreme Court (SC) banned the usage of Raw Petroleum Coke (RPC) but then they capped it and now it is 1.4 million tonnes that the Calcined Petroleum Coke (CPC) producers can import RPC as well as 500,000 tonnes which is given to the aluminium smelters. Based on which we were given quotas and licenses and we had to import the raw material to fulfil the Director General of Foreign Trade (DGFT) requirement.”
“The challenging point is that the CPC prices are going down because there is excess capacity in China, there are some new calcination units, which have come in and they are selling it at a very lower price. Current CPC price is hovering between USD 250 and USD 275, which means that we need to sell CPC at around Rs 26,000-27,000 compared to Rs 32,000 which was the average price last year, because of this the quarterly loss is there. In addition to this, we have taken a write off in the inventory of CPC fines because these fines are generated as a part of the process of raw material. Therefore, we have taken a hit of almost Rs 7.64 crore towards this in this quarter,” said Dempo.
Speaking about orders, he further mentioned, “Currently this quarter looks to be quite challenging because aluminium smelters are going to Chinese suppliers and they want to exhaust that 500,000 tonne that they are talking about where they are allowed to import CPC directly. Seeing that Chinese prices are lower, they are all going and trying to maximise on that import of 500,000 tonne, which we feel will ease out in the next quarter because beyond 500,000 tonne, they cannot import any raw material.""So this quarter we have some challenges where our prices are going down, but we feel that the demand should go up for CPC within the country and secondly we are also trying to source raw material other than just China. So the Chinese RPC is not coming down to the extent that CPC prices are coming down. But we have identified certain sources in the Middle East and south of America where the prices are much more attractive. So we are tackling this on two fronts, one is identifying new sources of raw material and then hopefully by next quarter, the demand for Indian produced calciner CPC should go up.”