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Graphite India melts after poor Q2 results

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Graphite India fell 3.11% to Rs 283.60 after consolidated net profit slumped 83.37% to Rs 185 crore on 62.38% plunge in net sales to Rs 882 crore in Q2 September 2019 over Q2 September 2018.

Operating Profit (EBITDA) fell 89% to Rs 191 crore in Q2 September 2019 over Q2 September 2018. EBITDA margin contracted to 22% in Q2 September 2019 compared with 72% in Q2 September 2018.

The gross debt during Q2 September 2019 was at Rs 394 crore. Cash (net of gross debt) was at Rs 1,934 crore. The announcement was made during market hours today, 30 October 2019.

Commenting on the results, K. K. Bangur, the chairman of Graphite India, has stated that, "The Q2 performance was impacted due to lower volumes and realization as compared to same period last year.

"The demand for steel decelerated in 2019 due to geopolitical issues, trade tensions and uncertainty over world economic growth which has impacted the investor sentiments, capital investments and trade. Manufacturing sector, particularly the auto industry, has performed poorly in many countries. The global economic factors has resulted in a lower steel production and de-stocking, across majority of the EAF steel producing nations. Furthermore, in Q3 CY2019 total steel production declined by 3% on QoQ basis. As a result of lower steel production and demand globally, there has been steep cut in the demand for electrodes, impacting graphite electrode prices."

"In the domestic market, we are facing intense competition from the Global graphite electrode manufacturers including China due to imbalance between electrode demand and supply and removal of anti-dumping duty on Chinese electrodes. The Indian steel industry is growing at a slow pace due to liquidity crisis, auto sector challenges and economic growth which is expected to register a five-year low. However, with expected increase in spending on infrastructure, affordable housing, urban metro rail, water supply, sewage and railway projects under the various government initiatives, the steel demand in India is likely to revive. Graphite India continues to focus on delivering high quality products and add new geographies and customers. The company maintains financial discipline with an aim to further strengthen its balance sheet in these challenging times," he added.

Graphite India is the largest Indian producer of graphite electrodes and one of the largest globally, by total capacity. Its manufacturing capacity of 98,000 tonnes per annum. Graphite electrodes are used in electric arc furnace-based steel mills and is a consumable item for the steel industry.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, October 30 2019. 14:24 IST