Graphite India Ltd

The Directors have pleasure in presenting their Forty Ninth Annual Report together with the audited statement of accounts of the Company for the year ended 31st March, 2024.

Financial Results

REVIEW OF THE ECONOMY

In 2023, the global economy displayed resilience amidst significant monetary policy adjustments, global policy uncertainties and subdued trade activities. Challenges stemming from conflicts and climate change, adversely impacted global prosperity and economic stability of the nations, presenting hurdles to their sustainable development practices. Despite these challenges, advanced economies demonstrated resilience, with robust labour markets supported by consumer demands. Inflation rates showed a downward trend across various regions, influenced by reduced energy and food costs, which lead to central banks to halt or decelerate the pace of interest rate increments.

Global inflation declined in 2023 but remained above the decade average of 2010-2019. The total global inflation rate decreased from 8.1% in 2022, a nearly three-decade peak, to 5.7% in 2023. Inflation peaked in many developing countries during the year. The European Central Bank notes that inflation in the eurozone decreased from 8.4% in the previous year to 5.4% in 2023. Growth prospects for many developing countries, especially those that are vulnerable and have low incomes, continued to face challenges, affecting the recovery from the pandemic.

The International Monetary Fund (IMF) reports that global economic expansion reached 3.2% in 2023. The growth rate for developed economies was at 1.6%, while emerging and developing economies maintained a growth rate of 4.3%, in line with the previous year. This performance enabled the global economy to avert a recession. The gradual reduction in inflation across many areas was a consequence of the implementation of interest rate hikes.

The economy of the United States grew by 2.5% in 2023, up from 1.9% in the previous year, propelled by strong consumer spending, supported by favorable fiscal conditions and stability in labour and housing markets. Conversely, the European economy encountered significant challenges due to major rate hikes by the European Central Bank, alongside substantial structural difficulties. Germany was particularly impacted by increased energy costs, strict monetary policies and a slower-than-anticipated recovery in demand from China. Structural issues, such as insufficient investment, workforce shortages, and reliance on energy-intensive industries, impeded the anticipated recovery in 2023, bringing Germany close to a recession.

Amid an uncertain global macroeconomic landscape, the Indian economy has emerged as a source of optimism and resilience in 2023, securing its position as the fastest-growing major economy globally. With a GDP growth rate of 7.8%, India continues to attract investment, leveraging its extensive scale of operations, skilled workforce, and leadership in technological and innovative advancements. Despite global challenges such as economic fluctuations, inflation, and rising interest rates, India's economic performance was supported by robust domestic demand, substantial public infrastructure investment, and a strengthened financial sector.

Thus, India retains its status as the fastest-growing major economy and is now the fifth-largest economy globally. In purchasing power parity (PPP) terms, India ranks as the third-largest economy. The IMF projects India's growth to remain strong at 6.8% in 2024 and 6.5% in 2025. A greater reliance on domestic demand has insulated India from various external pressures. According to the Reserve Bank of India's Monetary Policy, Consumer Price Index inflation is expected to decrease to 4.5% in fiscal year 2025 from 5.4% in fiscal year 2024. As 2024 unfolds, India is poised to maintain its status as the fastest-growing major economy, with a positive outlook for the future. It sets a strong foundation set for accelerated growth in the years ahead.

GRAPHITE INDIA

The Company's performance for FY 2023-24 was subdued compared to FY 2022-23. While revenue from operations remained flat at Rs. 2,894 crore for FY 2023-24 as against Rs. 2,913 crore in the previous year, PBT decreased (before exceptional item) to Rs. 125 crore as against Rs. 476 crore of previous year. This includes investment income of Rs. 273 crore as against Rs. 97 crore in the last year. The performance of the Company was adversely impacted mainly due to lower realisations and higher costs despite higher volume as compared to last year. Global markets continued to be impacted by economic uncertainty, including the effects of ongoing inflation and a high interest rate environment. In addition, geopolitical conflicts contributed to expanding disruptions of commercial trade. These and other macro factors contributed to a constrained global steel industry, which resulted in persistently soft demand for graphite electrodes and weak pricing.

The Company's Graphite and Carbon Segment continues to be the primary source of revenue and profit, accounting for about 92% of the total revenue.

OVERSEAS SUBSIDIARIES

Weak European economy fueled by the Russia Ukraine conflict led to an unprecedented increase in energy and gas costs rendering German electrode operations unviable. German graphite electrode production continued to remain close while restructured speciality and coating business are in operation. Liquidation process of one step down subsidiary, Bavaria Electrodes GmbH, is on.

DIVIDEND

Dividend @ Rs. 11/- per share on 19,53,75,594 equity shares of Rs. 2/- each for the financial year ended 31st March 2024 has been recommended by the Board of Directors.