HEG reported consolidated net loss of Rs 366 crore in Q4 March 2020 compared with net profit of Rs 524.42 crore in Q4 March 2019.
Consolidated net sales slumped 72.2% to Rs 374.44 crore in Q4 March 2020 over Q4 March 2019. Consolidated pre-tax loss stood at Rs 482.59 crore in Q4 March 2020 compared with pre-tax profit of Rs 806.22 crore in Q4 March 2019. The result was announced after market hours yesterday, 17 June 2020.
As a result of COVID-19 pandemic, the global economy is projected to contract sharply by negative 3% in 2020, much worse than during the 2008-09 financial crisis. Since HEG is a 70% export company, its business is dependent on global economic condition as its product is used by steel companies and steel is closely linked to GDP. The more steel is made, the more is the demand for electrodes. With COVID-19, the overall steel demand has reduced.
Consequent to lockdown during the major portion of the first quarter the revenue and the profitability for the first quarter of the FY 2020-21 are likely to be lower. It is difficult at this stage to assess the impact of COVID-19 on the revenue and profitability for the whole of FY 2020-21. Enough caution is applied toward cost optimization, the company said.
As on date, the company is long term debt free. HEG has only availed working capital limits for maintaining day to day operations. At present company does not foresee any significant impact in respect of its existing contracts and agreements where non-fulfillment of obligations due to the reason of COVID-19 by any party could lead to any material impact.
Meanwhile, the company said Riju Jhunjhunwala, currently the director of the company, will replace Shekhar Agarwal as vice-chairman of the company with immediate effect.
HEG is engaged in manufacturing of graphite electrodes, which are used by manufacturers of steel. The firm's segments include graphite, power and unallocable items/others.
Shares of HEG rose 0.63% to Rs 917.95 on BSE. The scrip hovered in the range of Rs 890.55 to Rs 921 so far.
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