Q1FY2011 standalone performance
- Net Profit at Rs 34 crore
- Gross Revenue at Rs 271 crore, up by 11%
- Basic EPS at Rs 1.99
- Electrode sales volume increased by 30% y-o-y
Graphite India Ltd (GIL), one of the major manufacturers of graphite electrodes in the world reported a standalone Net Profit of Rs. 34 crore for the quarter ending 30th June, 2010.
Gross Revenue for Q1FY2011 stood at Rs 271 crore, up by 11% as against Rs. 245 crore in the same period of last fiscal on standalone basis.
Basic EPS for Q1FY2011 was Rs. 1.99 on standalone basis.
Commenting on the results, Mr. K. K. Bangur, Chairman, Graphite India Ltd said:
“Graphite India showed strong top line growth during Q1 FY2011, both in terms of volume and value. The steel industry continued to recover during the quarter and we expect further strengthening in steel production going forward. Despite a difficult electrode pricing environment in Q1 FY2011 our focus on efficiency and cost management have resulted in Graphite India continuing to be one of the most profitable electrode manufacturers globally. We have also significantly enhanced our liquidity position and through our investment in capacity additions, are well positioned to capture the upside in electrode demand going forward.”
Industry Environment
The global steel industry continued to show signs of recovery in some continents during Q1 FY2011, with steel production rising to 364 million MT, an increase of 6% over Q4 FY2010. Steel production volumes year to date for calendar year 2010 are approximately 30% higher than the prior year period. Steel demand is rising due to the continued favourable impact of economic stimulus packages implemented by the major economies of the world. The resulting improvement in steel production has benefited the graphite electrode industry. Although graphite electrode volumes have been rising, they are expected to remain below pre-recession levels during the course of the year. Despite rising volumes, sales realization has moderated. However, prices are now showing signs of improvement.
Durgapur Plant Expansion
In Q4 FY2010 Graphite India revised its electrode capacity expansion plan at its Durgapur Plant from 10,500 MT to 20,000 MT per annum given the competitive capital cost and anticipated improvement in electrode demand in the medium term. Progress on this expansion plan continues on schedule and is expected to be completed by 3Q FY2011-12. The additional capacity of 9,500 MT will be installed at a low capex of Rs. 67.50 Crore. The focus of the expansion plan is to provide facilities with eco-friendly advanced technology and greater energy efficiency. The total cost of expansion is expected to be Rs. 255 Crore, to be funded through internal accruals and debt.
Investment in Power
Power constitutes one of the major costs of electrode production. In order to attain self-sufficiency and uninterrupted availability of quality power at economical rates, the Company decided to set up a coal based thermal power plant of 50 MW capacity at Durgapur. This is at an investment of Rs. 214 Crore. Power generation capacity will increase from the current 33 MW to 83 MW and will enable Graphite India to further optimise its cost of production and increase its global competitiveness. The Company is in the process of obtaining various statutory clearances. The project is expected to be commissioned by 4Q FY2011-12
About Graphite India Ltd.
Graphite India Ltd (GIL), headquartered in Kolkata is one of the major manufacturers of graphite electrodes in the world. GIL has a combined capacity of approximately 78000 tonnes per annum spread over four plants at Durgapur, Bangalore, Nashik and Rothenbach in Germany. A truly global company with over 40 years of expertise in the industry, GIL services its clients in over 50 countries.
The company has facilities designed for the manufacture of impervious graphite equipment and glass reinforced plastic pipes and tanks. It has an installed capacity of 33 MW of power generation through hydel and multi-fuel routes, which will be enhanced to 83 MW with installation of a 50 MW thermal power plant.
