wake of increased demand for medical oxygen, the Government barred industrial
use, except by nine sectors, from April 22. Due to the second wave of Covid-19
infections, the demand for medical oxygen increased five-fold in the second
week of April as compared to pre-pandemic days.
to Gautam Shahi, Director, CRISIL Ratings, the disruption in oxygen supply for
industrial use would temporarily affect small and mid-sized companies focused on
metal fabrication, automotive components, shipbreaking, paper and engineering
works. Such small businesses usually rely on merchant suppliers for operations
such as welding, cutting, cleaning and chemical processes. Generally, oxygen is
utilised by the industry onsite or for merchant sales. Onsite accounts for
75-80% of oxygen manufactured in India, while the rest 20-25% is distributed
through merchant sales via cryogenic tanks and cylinders. The healthcare sector
consumes about 10% of merchant sales.
about the credit quality of CRISIL-rated companies Sushant Sarode, Associate
Director, CRISIL Ratings said that they are expecting the disruption in oxygen
supplies to last for 6 to 8 weeks. Besides, the affected sectors can partly
manage their oxygen requirements with an inventory. Therefore, for them, only a
limited decline in revenue is expected, he added.
based in New Delhi, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh are
expected to be most affected as the demand for medical oxygen is much higher