Graphite India hit a lower circuit of 5% at Rs 203.30 after the company reported consolidated net loss of Rs 7 crore in Q4 March 2020 as against net profit of Rs 562 crore in Q4 March 2019.
Consolidated net sales slumped 64.4% to Rs 602 crore in Q4 March 2020 over Rs 1,693 crore in Q4 March 2019. The firm reported pre-tax loss of Rs 23 crore in Q4 March 2020 as against pre-tax profit of Rs 850 crore in Q4 March 2019. The Q4 result was released during trading hours today, 9 June 2020.
Lower volumes and realization has impacted the sales and margins on a year on year basis. Volumes improved in Q4 FY20 as compared to Q3 FY20, however sales were impacted due to lower realizations.
The company recorded a consolidated EBITDA loss of Rs 3 crore and an adjusted EBITDA (after eliminating the impact of fair value of inventory as per Ind AS) loss of Rs 64 crore during the quarter. The EBITDA was impacted due to fair value adjustment of inventory amounting to Rs 584 crore in FY2020.
The company had net cash of Rs 2,008 crore as on March 2020 compared with Rs 2,577 crore as on March 2019.
The Government of India announced nation-wide lockdown on 24 March 2020 to contain the outbreak of COVID-19. This resulted in muted sales in the last week of March 2020. The operations have since commenced in a phased manner in its factories since April/May, 2020 adhering to the guidelines of government authorities as applicable. While the sales and profitability of the company for the quarter were impacted due to the Iockdown, it is not possible to ascertain the exact quantum thereof. In the prevailing circumstances, the company does not expect any impact of COVID 19 on its ability to continue as a going concern.
The global and domestic demand for graphite electrode has been impacted due to partial closure of steel capacities, lower steel production and destocking of electrode inventory at customer end at a lower-pace than anticipated. The company is operating its factories at a low capacity and will scale up its operation after carefully assessing the course of Covid-19 in the near term, the company said in a statement.
The company's chairman, K. K. Bangur, stated: "The company's performance during the year was impacted due to the global economic slowdown and lower FAF steel production. In addition, the consumption of electrode inventory, that was built up by many customers last year, at a pace slower than expected also added to the downward pressure on electrode demand. These factors impacted the overall demand and supply balance resulting in lower sales volumes and price realizations. The unfortunate outbreak of COVID-19 around the world and in India, has placed economic activity at risk. Looking ahead, the recovery of economic activity around the world is generally expected to be slow and unpredictable. However, lower exports of steel from China to the rest of the world, especially to the regions having higher FAF capacities, will lead to an increase in domestic steel production and may result in higher demand for electrodes. Furthermore, the Indian domestic steel industry is expected to normalize in the medium term, with the revival of key sectors such as infrastructure and construction under the renewed focus on Make in India initiatives."
Graphite India is the largest Indian producer of graphite electrodes and one of the largest globally, by total capacity.
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