Graphite India Reports another Quarter of Strong Operational and Financial Performance in Q1 FY19

In terms of profitability, GIL’s operating profits have surged significantly from INR 59 crore in Q1 FY18 to INR 1,466 crore in Q1 FY19 whereas the same was recorded at INR 756 crore in the previous quarter of Q4 FY18 (Jan-Mar’18), a surge of 94% Q-o-Q basis.

The key reasons for the growth in the company’s sales and financial performance are higher volumes, price realisations, and capacity utilisations.

According to company`s chairman, Mr. K.K. Bangur, the overall strong steel production growth especially in China (7.3%) and reduction is Chinese steel exports in the first quarter of FY19 has supported the demand for graphite electrodes (GE). Also, the replacement of archaic polluting blast furnaces by new electric arc furnaces in order to curb environmental pollution in China has led to increased demand for GE (a key raw material for EAF) from the country. Further, the closure of polluting electrode capacities in and outside China also contributed to the transition in demand for electrodes leading to a surge in sales and profits of the company.

The company’s profit margins improved in Q1 FY19 as in the previous quarter of Q4 FY18, its revenue and margin growth was held back by the timing of the fulfilment of certain low price contracts. However, the benefit of higher prices and reduced low price contracts is reflected in the company’s performance in the first quarter of 2019.

Looking at the prospects of Graphite India in upcoming quarters of the current financial year 2018-19, the company’s capacity utilisation levels are expected to improve from current levels of 88%.

GIL is India’s one of the largest graphite electrode producers and one of the largest in the world by total capacity with an annual capacity of 98,000 tonnes. The company has four manufacturing plants with three in India and one in Germany.