Notes from the Rain Annual Report FY 2023.
- Largest producer of coal tar pitch (CTP) in the world
- 2nd largest producer of calcined petroleum coke (CPC) in the world
- 16 production facilities in seven countries
Calcined petroleum coke (CPC)
- Raw material: Green petroleum coke (GPC) is a byproduct of crude oil refining.
- Mfg process: CPC is produced using rotary-kiln and vertical-shaft technologies in a high- temperature process called calcining, which removes moisture and volatile matter from GPC.
- Use: CPC serves as a crucial raw material for anodes used in primary aluminium production as well as in the steel and titanium dioxide industries.
Coal tar pitch (CTP)
- Raw material: Coal tar is a byproduct of metallurgical coke used in the iron and steel industries.
- Mfg process: CTP is produced by distilling of coal tar, which separates the components based on different boiling points.
- Use: CTP is a critical raw material for anodes used by the aluminium industry, as well as in the graphite and refractory industries.
Cement
- Brand Priya Cement
- Started selling loose cement
Vice Chairman’s statement
- RAIN’s business model converts byproducts into essential raw materials.
- Historically, finished goods prices lead raw material prices, allowing for higher margins during market rises.
- And lower margins seen in falling markets.
- But keeping our margins within a general range as the markets move through cycles.
- Exceptionally long market rise experienced during the 18-month post-COVID (late 2021 to early 2023)
- Led to new market highs and unsustainably strong 2022 performance.
- 2023 saw significant margin decline due to slow drop in raw material prices following a sharper finished product price fall.
- Stabilization of downturn may take over 12 months which is longer than usual.
- RAIN historically faces challenges after strong years.
- Current downturn expected to last 1-2 more quarters.
- Price stabilization for both raw materials and finished goods anticipated.
- Significant operational improvements anticipated across segments following price stabilization.
- RAIN’s India calcination plants previously operated at low capacity due to GPC import restrictions.
- Recent relaxation of GPC and CPC imports by CAQM (Commission for Air Quality Management) allows for increased capacity utilization.
- Expects higher capacity to significantly improve overall performance.
- Increasing demand for CPC in and around India.
Outlook:
-
Carbon Segment:
- Increased capacity utilization due to relaxed GPC import restrictions.
- Positive outlook due to rising demand for primary aluminum in:
- Infrastructure development (emerging economies)
- Lightweight vehicle manufacturing
- Electric vehicles & renewable energy
-
CPC Outlook
- 85% CPC sales comes from primary aluminium smelters
- Despite short-term challenges, the long-term outlook for aluminium remains optimistic.
- Primary aluminium smelting remains the key driver of the world’s CPC and CTP sales.
- Smelter production reached record levels in 2023 despite a challenging economic environment.
- CPC products serve the titanium dioxide (TiO2) industry, primarily used in paints.
- TiO2-related CPC volumes faced challenges due to slowing construction activity, growth is likely as economic outlooks improve.
-
Advanced Materials Segment:
- Economic recovery expected across end-user industries.
- Growing demand for bio-based & eco-friendly product lines.
- Promising future growth in battery anode materials.
-
Cement Segment:
- Cement demand rebounded strongly in 2023, growing by 7 - 8% on a per annum
- Rising infrastructure development & government initiatives.
- Expected Indian cement demand increase to 525 MNTPA in 5 years.
Capacity utilisation
- Carbon: 65%
- Advanced Materials: 75%
- Cement: 80%
Misc
- No planned major capex projects for 2024
- Cash from ops: Rs 3,063 crore
- Rs 1,391 cr of cash freed from inventory reduction
- Cash up from Rs 1,167 cr last year to Rs 1,405 cr
- Trading below book value. But it always has.
Subscribe To Our Free Newsletter |