Companies

Graphite India reports ₹13-crore net loss in June quarter

Our Bureau Kolkata | Updated on August 12, 2020

K K Bangur, Chairman, Graphite India

Graphite India, the country’s largest graphite electrode maker, reported a standalone net loss of ₹13 crore for the quarter ended June 30, 2020. The company had reported a net profit of ₹195 crore in the year ago period.

During the period under review, the company saw its turnover (net sales) slip to ₹350 crore, a year-on-year decline of 61 per cent.

Graphite electrodes are used in electric arc furnace based steel mills and is a consumable item for the steel industry. Globally, Graphite India is also amongst the largest (graphite electrode) producers with a manufacturing capacity of 98,000 tonnes per annum across three plants — Durgapur and Nashik in India and Nurnberg in Germany.

EBITDA (standalone) was impacted due to write down of inventory to the tune of ₹85 crore for Q1FY21, while lower volumes and realisation impacted sales and margins on a year-on-year basis, the company said in an investor presentation.

Outlook

According to KK Bangur, Chairman, Graphite India, the quarter started on an unprecedented note with the announcement of the nationwide lockdown. From mid-April, operations resumed at factories and offices in a calibrated manner. The capacity utilisation was 36 per cent in Q1FY21 as compared to 75 per cent in Q1FY20.

“Business activity has shown early signs of picking up with the relaxation in lockdown restrictions. However, economic recovery is expected to be slow. In the near term, the graphite electrode industry may benefit from lower exports of steel from China to the rest of the world driving steel production in the regions having electric arc furnace capacities,” he said.

Graphite electrode demand and realisation continues to remain under pressure. Needle coke prices are still not fully aligned with electrode prices and further softening is expected, Bangur added.

Decline in steel production

Steel production in India also significantly declined during the quarter due to the prolonged lockdown, restricted inter-State movement and migration of labour.

The steel consuming sectors such as infrastructure, construction, automobiles remain heavily impacted, Bangur pointed out.

In Q1FY21, domestic steel production stood at 15.8 million tonnes, a reduction by over 43 per cent, as compared to the 27.9-mt production in the year-ago period.

“The steel industry has been hit hard by the pandemic and as per the World Steel Association most countries, excluding China, have registered a decline in steel production on a y-o-y. The consumption of inventory was at a slower pace than expected due to lower steel demand resulting in subdued graphite electrode demand and pricing,” Bangur maintained.

Published on August 12, 2020

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