Yes, its mainly because of the coking coal prices, which is main RM for coke & energy division. I was trying to establish this relation and this is what I have found.
- From the first graph, the realisations seem to have minimal impact on the margins, on the other hand, material cost is the one which affects the margins.
- The second graph is the material cost as % of the expenses for Sandur Vs the coking coal prices (taken from Coal India). It shows good correlation between material cost for Sandur & coking coal prices.
- Thus, the margins for Sandur are function of the coking coal prices which is major raw material for the company.
Note: As per my understanding, Sandur imports coal from countries like Australia, but for this exercise, I have taken the prices from Coal India, with the assumption that prices from coal India would be similar to that of international coal prices.
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