assemblyGIDC 2015: Initial impressions : BY JS Research

The parliament has approved GIDC Act 2015 yesterday, where we believe the said has sprung a few surprises.

 

  • The GIDC for industrial users has been reduced from Rs150/mmbtu to Rs100/mmbtu (+ve for cements and textiles).
  • If the industrial users have not collected the cess so far under GIDC 2011 and GIDC 2014, the cess shall not be collected from the industrial sector (excluding Fertilizer Fuel) (+ve for textiles).
  • The Second Schedule under GIDC 2015 sees introduction of two categories (1) Fertilizer Feed (Old) and (2) Fertilizer Feed (New), replacing the previous category of Fertilizer – Feed Stock. The rate of GIDC is same at Rs300/mmbtu. We believe this raises the risk of GIDC on new fertilizer plants, receiving concessionary gas prices (-ve for FATIMA and EFERT).

 

  • We seek further clarity on GIDC. Based on initial impressions, we believe yesterday’s developments to be positive for Cements and Textile (given that the market had already priced-in approval of GIDC) and negative for FATIMA and EFERT (though these companies will continue their legal recourse).

Syed Atif Zafar, CFA

Head of Research

JS Global Capital Limited

6th Floor, Faysal House, Main Shahrah-e-Faisal, Karachi, Pakistan

Dir: +92 21 32799519

Tel: +92 21 111 574 111 (ext. 3118)

Fax: (92-21) 32800167

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.