In Q1 FY2024 Graphite India registered Consolidated Net Sales of Rs. 747 Cr., a decline of 13.7% y-o-y and a decline of 8.3% on q-o-q basis. Operating EBITDA was Rs. (13) Cr. after provision of inventory write down of Rs. 157 Cr. which resulted in a Net Loss of Rs. 30 Cr. The standalone capacity utilization during the quarter was 67% as compared to 80% in Q1 FY2023. This quarter’s financial results were impacted due to decline in both realization and volume.
- Net Profit: The Company reported a net profit of ₹101 crore for Q1FY24, which is a decline of 30% compared to ₹144 crore in the same period last year.
- Revenue: Graphite India’s revenue from operations in Q1FY24 stood at ₹3,422.6 crore, showing a significant increase of 60% from ₹2,140 crore in the year-ago period.
- EBITDA: The Company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 79% to ₹714.4 crore in the June quarter, compared to ₹399 crore in the same period last year. The EBITDA margin stood at 20.9%, up from 18.7% in the previous fiscal.
- Segment Performance: The Company’s performance in different segments varied. The Consumer & Bazar Segment (C&B) grew by 9%, while the Business to Business (B2B) segment experienced a single-digit revenue decline due to lower exports and demand from export-oriented industries.
- Crude Steel Production: Graphite India’s standalone crude steel production for the quarter came in at 4.67 MT, compared to 4.33 MT in the same period the previous year. Sales volumes also saw a rise to 3.88 MT in the quarter under review from 3.15 MT in Q1FY23.
- Key Factors Impacting Results:
- The company’s results were reviewed by the Audit Committee and approved by the Board.
- Some figures in the report are balancing figures between audited figures and unaudited published figures.
- Tariff orders by regulatory bodies impacted the company’s electricity charges.
- The Code on Social Security, 2020, and assessment orders influenced certain financial aspects.
- Due to a decline in sale prices, the company recognized inventory on Net Realizable Value (NRV) basis.
- The company sold land in Bengaluru, which had an impact on its financials.
In Q1 FY2024 Graphite India registered Consolidated Net Sales of Rs. 747 Cr., a decline of 13.7% y-o-y and a decline of 8.3% on q-o-q basis. Operating EBITDA was Rs. (13) Cr. after provision of inventory write down of Rs. 157 Cr. which resulted in a Net Loss of Rs. 30 Cr. The standalone capacity utilization during the quarter was 67% as compared to 80% in Q1 FY2023. This quarter’s financial results were impacted due to decline in both realization and volume.
Globally, there has been a 1.7% decline in y-o-y steel production, mainly attributed to subdued demand for electrodes. This has led to reduced capacity utilization and pricing pressures across the industry. Despite this trend, India has displayed resilience, achieving a substantial 7.8% y-o-y growth in its steel output during Q1 FY24 . However increased availability of imported graphite electrodes, have impacted the domestic demand and pricing. Raw Material price correction was not aligned with the fall in electrode price impacting operating margins.
Higher government spending on infrastructure and increased traction of EAFs in the steel industry will drive medium to long term growth in coming quarters. Stringent emission regulations enforced by the governments globally are compelling the steel industry to seek the more efficient EAF steelmaking technology, will positively impact the demand for graphite electrodes going forward.
From a balance sheet perspective, we maintain a strong consolidated Net Cash position of Rs. 2,115 Cr. at the end of June 2023. We are pleased to announce that on August 07, 2023, Graphite India sold its land in Bengaluru for a cash consideration of Rs. 986 Cr., which was received in a single tranche. This will be reflected in our H1 FY24 Net Cash position.
Overall, Graphite India’s outlook on the electrode industry’s future remains positive. We continue to adopt efficient operational practices and exercise prudent financial management
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