COVID-19 takes a toll on Graphite India's Q1 FY21 performance as sales plummet by 58%
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Indian Graphite electrodes manufacturer, Graphite India (GIL) posted a consolidated sales of INR 409 crore for Q1 FY21 (Apr-Jun), down by 58% y-o-y.
A net loss of INR 78 crore has been reported in Q1 FY21 against net profit of INR 220 crore in Q1 FY20.
The company's capacity utilisation in Q1 FY21 stood at 36% against 75% in Q1 FY20.
COVID-led lockdown adversely affects GIL's results
- Commenting on company's performance, KK Bangur, Graphite India's chairman said that the unprecedented announcement of the nationwide lockdown in an attempt to contain the outbreak of Covid-19 has taken a toll on GIL's performance.
- Due to the pandemic, the steel industry has been hit hard and as per the World Steel Association (WSA), most countries excluding China have registered a decline in steel production on a y-o-y with world steel output being reduced by 25% in Q2 CY20 (Apr-Jun).
- He further added that the consumption of inventory was at a slower pace than expected due to lower steel demand resulting in subdued graphite electrode demand and pricing.
Outlook ahead
- While the business activity has shown early signs of picking up with the relaxation in lockdown restrictions, economic recovery is expected to be slow as the adverse impact of Covid-19 is here to stay.
- In the near term, the graphite electrode industry may benefit from lower exports of steel from China to the rest of the world driving steel production in the regions having EAF capacities.
- Graphite electrode demand and realization continues to remain under pressure. Needle coke prices are still not fully aligned with electrode prices and are expected to soften further.
- However, Graphite India has initiated several cost rationalization measures which will enable the company to navigate through these difficult times, Mr. Bangur concluded.