Graphite India Q2 profit up 37.8% despite a drop in gross sales
Company officials attributed the year-on-year (YoY) growth in Q2 FY2016 net profit to decrease in material cost, increase in other income.
By ET Bureau | Updated:
KOLKATA: Graphite India posted a 37.8 per cent growth in its net profit at Rs 27.7 crore for the second-quarter (Q2) ended September 30, 2015, compared to Rs 20.1crore profit recorded the corresponding period previous fiscal. The rise in net profit comes despite a 18.7 per cent drop in gross sales at Rs 332.4 crore in the said period against Rs 409.2 crore earned the corresponding previous quarter.
Company officials attributed the year-on-year (YoY) growth in Q2 FY2016 net profit to decrease in material cost, increase in other income and lower finance costs. The company's sales, however, were impacted because of the degrowth in sales volume as well as drop in sales realisation in both domestic and export market.
"Operating profit during the quarter under review was up 24 per cent at Rs 55.1 crore. The operating margins benefitted by lower input costs, mainly in needle coke prices. Other income too was higher at 8.7 crore in Q2 FY2016 as against Rs 4.6 crore in Q2 FY2015 due to favorable exchange rate movements," the company release stated.
Commenting on the performance, Graphite India chairman KK Bangur said, despite a YoY decline in gross revenues during the quarter, both operating and net profit grew and margins expanded primarily because of the company's focus on various cost reduction initiatives.
Elaborating further, he said: "Economic slowdown in China coupled with uncertain demand prospects in many global economies over the last few quarters has led to surplus steel production. This has resulted in a surge of subsidized steel exports from China, which, in turn, has affected local steel production of major economies. Overall, this trend has had a negative impact on the demand for graphite electrodes globally." But the management is optimistic about the long term dynamics of the graphite electrode industry.
As on September 30, 2015, the company's total debt stood at Rs 176 crore, cash & cash equivalents at Rs 385 crore and net cash at Rs 209 crore.
Company officials attributed the year-on-year (YoY) growth in Q2 FY2016 net profit to decrease in material cost, increase in other income and lower finance costs. The company's sales, however, were impacted because of the degrowth in sales volume as well as drop in sales realisation in both domestic and export market.
"Operating profit during the quarter under review was up 24 per cent at Rs 55.1 crore. The operating margins benefitted by lower input costs, mainly in needle coke prices. Other income too was higher at 8.7 crore in Q2 FY2016 as against Rs 4.6 crore in Q2 FY2015 due to favorable exchange rate movements," the company release stated.
Commenting on the performance, Graphite India chairman KK Bangur said, despite a YoY decline in gross revenues during the quarter, both operating and net profit grew and margins expanded primarily because of the company's focus on various cost reduction initiatives.
Elaborating further, he said: "Economic slowdown in China coupled with uncertain demand prospects in many global economies over the last few quarters has led to surplus steel production. This has resulted in a surge of subsidized steel exports from China, which, in turn, has affected local steel production of major economies. Overall, this trend has had a negative impact on the demand for graphite electrodes globally." But the management is optimistic about the long term dynamics of the graphite electrode industry.
As on September 30, 2015, the company's total debt stood at Rs 176 crore, cash & cash equivalents at Rs 385 crore and net cash at Rs 209 crore.
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