Graphite India announced that ICRA has reaffirmed the long term rating at [ICRA] AA+ (pronounced ICRA double A plus) and short term rating at [ICRA] Al+ (pronounced ICRA A one plus) for Rs. 1,000 crore Line of Credit for working capital of the Company. The Outlook on the longterm rating is Negative.

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Consolidated net sales for quarter ending June 2020 stood at Rs 409 crore, declining nearly 58% from Rs 967 crore in the same period last year. The result was announced after market hours yesterday, 12 August 2020.

Graphite India reported a pre tax loss of Rs 80 crore in Q1 June 2020 as against a profit before tax of Rs 333 crore in Q1 June 2019. It posted an EBITDA loss of Rs 63 crore after inventory write down of Rs 159 crore.

The company reported gross debt of Rs 308 crore and cash (net of gross debt) of Rs 2,290 crore.

Commenting on company's performance, KK Bangur, Chairman of Graphite India said, “The quarter started on an unprecedented note with the announcement of the nationwide lockdown in an attempt to contain the outbreak of Covid-19. From mid April, we gradually started resuming operations at our factories and offices in a calibrated manner. Graphite India registered consolidated Net Sales of Rs 409 crore, EBITDA Loss of Rs 63 crore after inventory write down of Rs 159 crore and Net Loss of Rs 78 crore during the quarter. The capacity utilization was 36% as compared to 75% in Q1 FY2020. Despite challenging environment, our balance sheet remains robust with a Net Cash balance of Rs. 2,290 Cr at the end of June 2020. The global health crisis caused by the Covid-19 pandemic has morphed into an economic crisis. The steel industry has been hit hard by the pandemic 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 CY2020.

He further added, The consumption of inventory was at a slower pace than expected due to lower steel demand resulting in subdued graphite electrode demand and pricing. Steel production in India also significantly declined during the quarter due to the prolonged lockdown, restricted inter-state movement and migration of labor. It is difficult to ascertain the full impact of Covid-19 on our business but management is staying close to its customers, suppliers and employees during these difficult times. Business activity has shown early signs of picking up with the relaxation in lockdown restrictions. However, 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 we expect them to soften further. Graphite India has initiated several cost rationalization measures which will enable the Company to navigate through these difficult times.

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

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Net loss of Graphite India reported to Rs 78.00 crore in the quarter ended June 2020 as against net profit of Rs 220.00 crore during the previous quarter ended June 2019. Sales declined 57.70% to Rs 409.00 crore in the quarter ended June 2020 as against Rs 967.00 crore during the previous quarter ended June 2019.

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Graphite India will hold a meeting of the Board of Directors of the Company on 12 August 2020.

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