- 03 Oct 2022
- ICICIdirect Research
GRAPHITE INDIA PLANS TO SHUT DOWN ITS GERMAN GRAPHITE ELECTRODE PRODUCTION AS OF NOW DUE TO RISING
GRAPHITE - 520 Change: -14.35 (-2.69 %)News:
A weak European economy fuelled by the Russia Ukraine conflict has led to an unprecedented increase in energy and gas costs rendering Graphite India’s German operations unviable. Hence, the local management has decided to shut down its German graphite electrode production as of now while restructuring specialty and coating operations as they are not so energy intensive.
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Graphite India’s German facility has graphite electrode production capacity of ~18000 tonnes, thereby contributing ~18% to the overall Graphite India’s aggregate graphite electrode making capacity of 98000 tonnes. Over the last few quarters, Graphite India’s German operations have been making EBITDA losses. Hence, while on an immediate basis the recent development may have a knee jerk reaction on the stock price, over the medium to longer term horizon, it may lead to reducing negative contribution from the German subsidiary in the overall consolidated operations.
Impact:
Neutral.