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Graphite India slips after dismal Q2 performance

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Graphite India fell 1.71% to Rs 181 after the company reported a consolidated net loss of Rs 41 crore in Q2 FY21 compared with net profit of Rs 185 crore in Q2 FY20.

Net sales during the quarter declined by 45% year-on-year (YoY) to Rs 485 crore in Q2 FY21. Pre-tax loss in Q2 September 2020 stood at Rs 45 crore. The company recorded a pre-tax profit of Rs 172 crore in Q2 September 2019.

Current tax outgo was Rs 1 crore in Q2 FY21 as against Rs 23 crore in Q2 FY20.

K K Bangur, the company's chairman, said: The second quarter of the fiscal year started on a positive note with partial relaxation in lockdowns and gradual resumption of business activity. We started operations at all our factories from May onwards and ramped up production in a phased manner.

The consolidated capacity utilization was 60% as compared to 36% in the previous quarter. The performance was encouraged by improvement in business activity which was offset by lower realizations as pricing continues to remain under pressure. Our balance sheet remains robust with a consolidated net cash balance of Rs 2,404 crore at the end of September 2020.

Domestic steel industry registered a strong rebound in the quarter with steel! production increasing by 73% on q-o-q basis to 27.1 Mt driven by improvement in industrial activity and higher exports. Our volume growth during the quarter was also driven by demand from domestic steel players however realization remained under pressure.

We remain cautiously hopeful that the down cycle of the electrode industry is bottoming out and with the uptick in overall economic activity, we can expect a growth in the medium term. In the current market conditions, Graphite India continues to focus on operational excellence and prudent capital management to emerge stronger.

Graphite India is the largest Indian producer of graphite electrodes and one of the largest globally, by total capacity.

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

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First Published: Fri, November 13 2020. 14:33 IST