The company posted first quarterly loss in more than one decade. Earlier, in June 1997 quarter, it had posted net loss of Rs 2 lakh.
during the quarter under review reported 65 per cent year-on-year (YoY) drop in its consolidated net sales at Rs 643 crore. It posted operating loss of Rs 445 crore in Q3FY20, against profit of Rs 1,149 crore in the year-ago quarter.
The lower volumes and realization has impacted the sales and margins as compared to same period last year. In addition, EBITDA (earnings before interest, tax, depreciation, and amortisation) was impacted due to fair value adjustment of inventory amounting Rs 490 crore in Q3FY20.
The management said that during the quarter, the company’s performance was significantly impacted due to lower volumes and realizations. Furthermore, profitability declined mainly due to a non-cash fair value adjustment of inventory at net realizable value as per Ind AS, of Rs 490 crore in Q3FY20.
The lower steel production, graphite electrode demand was impacted due to the consumption of electrode inventory built up by many customers last year when electrodes were in short supply.
Overall, the demand for graphite electrode is expected to improve with the pick-up of steel production in developed nations having significant electric arc furnace (EAF) capacities. Further, realignment of key input prices in line with electrode prices is the need of the hour to support the industry. However, global slowdown in steel demand coupled with increased steel exports from China is expected to impact demand of electrodes, it added.