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Sowmya Sundar

LONG-TERM exposures can be considered in Rain Calcining at Rs 25. Business Line's earlier recommendation was at Rs 18 in June. We reiterate our recommendation on the back of increasing demand for aluminium and rising alumina prices (75 per cent of the demand for calcined petroleum coke, the main product of Rain Calcining, comes from aluminium smelters); capacity increase to fulfil the demand in the next couple of years; and interest cost savings.

A number of brown-field aluminium expansion projects are taking place at the global level and the demand for calcined petroleum coke is expected to rise by 4 per cent and 5 per cent in 2004 and 2005, respectively. This would mean an additional annual demand for three-lakh tonnes of calcined coke. The company is expanding its capacity by 20 per cent to 3.6-lakh tonnes to meet this demand. In addition, the debt restructuring arrangement entered into in 2002 would also result in interest cost savings.

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