Amid steel slump, Graphite India hints at production cut

Abhishek Law Graphite India, among the country’s largest makers and suppliers of graphite electrodes, has hinted at a production cut amidst fears over a slowdown in the steel industry.

Graphite electrodes are used in the manufacture of steel through the arc-furnace route.

The Bangur family-controlled Graphite India is also amongst the largest manufacturers and suppliers of carbon and graphite specialty products in the country.

According to KK Bangur, Chairman, global cues remain weak, especially in markets such as West Asia, South-East Asia and Europe. The company had exited the Iran market when the US imposed sanctions there. Iran used to account for 5 per cent of its global turnover. “There is a possibility of a production cut this year, unless the demand picks up towards the second half. We have been going slow on production post Q3 (September onwards) of last fiscal. However, to what extent there will be a (production) cut, it is difficult to say immediately,” he told BusinessLine on the sidelines of the company’s AGM.

Graphite’s India production annually is to the tune of 80,000 tonnes, and this is primarily from its existing facilities in Durgapur and Nashik. This apart, it produces another 18,000 tonnes at its facility in Germany.

“There is no point in having additional inventory and blocking capital,” Bangur said, adding that new capacities will not be created in a depressed economic scenario as that will block capital.

However, the domestic market, he maintained, continues to be good, with companies such as Essar, JSW and Tata Steel expanding capacities or making acquisitions. “Essar Steel may be going through bankruptcy proceedings. But despite that we have not lost a single rupee there. The India market relatively looks good, along with Japan and the US,” he said.

Closure of unit

According to Bangur, the recent closure of its Bengaluru unit (at Whitefield) will not affect operations.

The unit was closed down recently following environmental concerns. Employees were paid off, with the company categorising it under exceptional items to the tune of ₹55 crore.

“Production-wise we do not see any issue with the closure of the Bengaluru unit. Existing units can be de-bottlenecked and ramped up. We may look at monetising the land (in Bengaluru), too,” Bangur said.

Graphite India, Bangur said, is open to hiking its stake in US-based graphene sheet producer General Graphene Corporation. It had bought a stake in Graphene last year through its wholly-owned Dutch subsidiary.

Graphite India will invest $18.6 million (₹135 crore), in tranches, in the US-based company, subject to the completion of certain milestones. It stake will subsequently be 46 per cent.

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