Oxygen reallocation will impact small biz: Crisil

April 21, 2021 15:27

Reallocating oxygen for medical purposes to take care of the rising COVID cases will have an adverse impact on small businesses in some sectors, domestic rating agency Crisil said on Wednesday.

It said the "hiccup" seems temporary for now, and it is unlikely to impact the credit quality of the affected businesses. The impact will be greater for companies in Maharashtra, New Delhi, Rajasthan, Madhya Pradesh and Gujarat, where medical oxygen demand has increased multiple times due to high COVID-19 caseloads, the agency added.

The central government has barred industrial use of oxygen except in nine designated sectors from Thursday onwards to divert the available stocks for life-saving medicinal use.

Demand for medical oxygen is estimated to have rocketed five-fold in the second week of April versus pre-pandemic levels as COVID-19 infections took off, Crisil Ratings said.

"The disruption in the supply of oxygen for industrial use would temporarily impact the revenues of small and mid-sized companies into metal fabrication, automotive components, shipbreaking, paper, and engineering," its director Gautam Shahi said.

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