Unable to pass on the clean environment cess, says NBL Ind

Budget 2016 while renaming the Clean Energy Cess as Clean Environment Cess, the government proposed to raise the cess on coal, lignite and peat from the current Rs 200 per tonne to Rs 400 per tonne.

NCL Industries will not be able to pass on the cess to its consumers, said Managing Director K Ravi because as it is the cement companies are not working at their full capacity. The additional cess is likely to hit the company’s operating profits by more than 5-6 percent, he added.

The company consumes around 3 lakh tonne coal which is 100 percent imported said K Ravi.

Cement prices too have now started correcting in South, he said.Below is the transcript of K Ravi’s interview with Nigel D’souza on CNBC-TV18. Q: Could you tell us what exactly is your annual consumption of coal? A: Ours is a small company and we consume about three lakh tonnes of coal per year. Q: That would equate to roughly around Rs six crore on a per annum basis if this Rs 200 per tonne is implemented. A: Very right, about Rs six crore is the initial burden. And not only that, as you know, cement industry also consumes a lot of power. And thermal power cost is also going to go up. So, this is going to be a big hit for the cement industry. Q: So, you are using around three lakh tonnes per annum, so you are saying power cost as well as this Rs 200 per tonne goes up, so what exactly is the hit you can see on your operating profit. I was just looking through your numbers, on a quarterly basis, you are doing roughly around Rs 20 crore. For the nine months, you have done around Rs 90 crore. Rs six crore already, so could you see around 5-6 percent hit on your operating profit? A: Very right. Maybe it is going to be a little more than that. Q: So, more than 5-6 percent hit is what you can see in your operating profit for the coming year? A: Correct. Q: And do you believe that you can pass on this particular price increase and this hit that you are going to see? Do you think that your consumers will be okay with that? A: No, I do not think cement industry is in a position to pass on because most of us, we are not able to operate at full capacities, so we may have to absorb the current trend immediately. Q: And out of this total coal requirement, how much do you consume, how much do you import? A: Almost 100 percent, we are importing, because that is working out cheaper. And the quality is also good. So, we are 100 percent using imported coal. Q: Could you tell us in the last one month or so, have prices gone up and could you tell us by how much? A: You are talking about cement prices? Q: Yes. A: In fact in south, the prices are going down in the last one month. Q: How much has it gone down by? A: About Rs 10-15 a bag.