SRF to realise Rs85 crore in Q4 from sale of carbon credits

SRF has received an additional 1.29 million certified emission reductions (CER), commonly referred to as carbon credits, from the UN framework convention on climate change (UNFCC). With the latest issuance, the company has received a total of 1.83 million carbon credits from the global body so far.

Carbon credits are tradable certifications received under the Kyoto Protocol on climate change for entities or projects, which result in a reduction of greenhouse gases. Advanced countries who are major greenhouse emitters, have targets for reducing emissions. If they are unable to meet their reduction targets, they can also meet their obligation by buying carbon credits. SRF is receiving the credits for its project for the incineration of HFC -23, a greenhouse gas, by thermal oxidation. The project was expected to generate cash flows from carbon credits from the next financial year. As the project is ahead of schedule, the company has received part of the credits this year itself.

The project is expected to generate around 3.8 million carbon credits annually, according to the company.

Out of the total received so far, SRF is planning to sell 1.4 million credits in the current quarter for Rs85 crore. The company has already concluded forward contracts to sell 1.4 million credits.

The 1.29 million credits issued to SRF is the single largest such issuance by UNFCC to a single entity so far. Besides, SRF has cornered more than 50 per cent of such credits issued globally by UNFCC so far.

Enthused by the initial success, SRF is planning to sell around four million carbon credits during the next financial year.

SRF is a leading manufacturer of refrigerant gases and nylon tyre cord and belting fabrics. The company is a market leader in India in most of the segments it operates in and a large exporter, catering to 55 countries globally.

SRF is trading at Rs280.3 (up 3.74 per cent) on the NSE at 02.50 PM today.