Net sales during the quarter more than halved to Rs 967 crore from Rs 1,965 crore, on account of lower volumes and realizations as compared to previous quarter. Operating profit came in at Rs 352 crore, down 76 per cent over previous year quarter. EBITDA (earnings before interest, taxes, depreciation, and amortization) margins contracted to 36 per cent from 75 per cent, due to increase in average needle coke cost.
The weakening global economy put electrode prices under severe pressure which have impacted the overall demand and supply dynamics, putting further downward pressure on the company’s performance.
The steel industry continues to face these headwinds during the current fiscal year with no sign of relief due to the challenging state of the global economy resulting in lower steel production in the electric arc furnaces (EAF) producing nations. Furthermore, the excess production of graphite electrodes in China due to relatively slow ramp up of EAF capacities is leading to cheaper graphite electrode exports to other countries, K K Bangur, chairman of Graphite India said.
Against the backdrop of the removal of antidumping duties on Chinese electrodes in India, this trend has intensified, forcing companies to reduce prices to maintain market share. From a cost perspective, needle coke prices have remained at higher levels placing further pressure on margins, he said.