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alvarajo [printed: November 3, 2008 1:46 PM] [saved: November 3, 2008 1:46 PM] S:\Sungard\2008_11 Materials\Presentation Recreate\10084Q438_Sungard_v2.ppt

Graphite India Limited

Q1 FY2011 Earnings Presentation


2

Important Notice

Forward Looking Statements

This presentation contains statements that contain “forward looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Graphite India’s future business developments and economic performance.

While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations.

These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance.

Graphite India undertakes no obligation to publicly revise any forward looking statements to reflect future / likely events or circumstances.


3

Highlights

Gross Revenue increased by 11% compared to Q1 FY2010

Electrode sales volume increased by 30% compared to Q1 FY2010

However, lower price realization resulted in a decrease in Operating Profit by 26%, compared to Q1 FY2010

Significant financial flexibility with Rs. 107 Crore net cash

Capacity utilization in Q1 FY2011 was approximately 60% versus an average of 54% for FY2010

Durgapur expansion plan of 20,000 MT per annum is on track for completion by Q3 FY2011-12

Power generation capacity expansion from 33MW to 83MW is on track for completion by Q4 FY2011-12

Global steel production continues to rise and Q1 FY2011 production grew 6% compared to Q4 FY2010

Commenting on the results and performance, Mr. K. K. Bangur, Chairman of Graphite India said:

“Graphite India showed strong top line growth during Q1 FY2011, both in terms of volume and value. The steel industry continued to recover during the quarter and we expect further strengthening in steel production going forward. Despite a difficult electrode pricing environment in Q1 FY2011 our focus on efficiency and cost management have resulted in Graphite India continuing to be one of the most profitable electrode manufacturers globally. We have also significantly enhanced our liquidity position and through our investment in capacity additions, are well positioned to capture the upside in electrode demand going forward.”


4

Business Snapshot

Largest Indian producer of graphite electrodes and one of the largest globally, by total capacity

One of the leading players in a highly consolidated industry and accounts for 6.5% of global electrode capacity

High barriers to entry due to technology intensive nature of the industry

Over 60% of electrode production exported in competition with global players

Brownfield expansion at much lower capex compared to greenfield expansion, significantly enhancing global competitiveness

Despite low pricing during a significant part of the last decade, Graphite India was consistently profitable while leading players made losses

Graphite electrode demand is dependent on Electric Arc Furnace (EAF) steel production. EAF steel production increased from 25% of global steel production in 1985 to an expected 34% in 2010

Strong secular support for future steel production via EAF route due to significant advantages over traditional blast furnace method

Global client base with no client accounting for more than 6.5% of revenues

Steady double-digit revenue CAGR over the past five years despite a global slowdown

Strong cost management resulting in average EBITDA margins of approximately 25% from FY 2007 to FY 2010 despite a slowdown in revenue growth

Steady growth of export business, which tripled in size from FY 2001 to FY 2009

Strong balance sheet with low leverage and large cash position as well as steady cash flow generation provides flexibility for organic and inorganic expansion

Global Market Position

Best-in-ClassOperations

Attractive Industry Dynamics

Strong Financial Performance


5

Group Financial Performance

Notes:1 Gross Revenue includes excise duty2 Operating Profit defined as earnings before depreciation, interest and taxes and includes other income

(Rs. Crore) Standalone Q1 FY2010

Standalone Q1 FY2011

% Y-o-Y Growth



% Q-o-Q Growth

Gross Revenue1 245 271 11% 351 271 (23%)

Net Revenue 234 258 10% 339 258 (24)%

Operating Profit2

84 62 (26%) 100 62 (38%)

% Margin 36% 24% 30% 24%

Net Profit 45 34 (24%) 56 34 (39%)

% Margin 19% 13% 16% 13%

Basic EPS (Rs.) 2.64 1.99 (25%) 3.25 1.99 (39%)


6

Segment Financial Performance

Notes:1Gross Revenue includes excise duty



% Y-o-Y Growth



% Q-o-Q Growth

Y-o-Y Comments

Gross Revenue1

Graphite and Carbon

200 212 6% 281 212 (25)% Increase in volume in domestic as well as export market

Power 5 7 40% 9 7 (22)% Higher generation from Hydel plant

Steel 14 22 57% 22 22 -

Unallocated 21 25 19% 32 25 (22)%

EBIT

Graphite and Carbon

65 47 (28%) 76 47 (38)% Decline in realization and increase in input cost

Power 0 4 - 5 4 (20)%

Steel (2) 0 - 2 0 -

Unallocated 4 6 50% 7 6 (14)%


7

Quarterly Financial Performance

Continued moderation in electrode prices and increasing input costs during Q1 FY2011

Moderation in electrode prices in Q4 FY2010 impacted margins compared to Q3 FY2010

Increase in domestic and export volumes in Q1 FY2011 y-o-y, offset by moderation in prices

Larger volumes in Q4 FY2010 q-o-q and better contribution from non-electrode businesses

Q3 FY2010 electrode volume growth flat compared to Q2 FY2010

Note:1 All numbers show n are for the standalone business

244

292 291

351

271

15% 20%

(0%)

21%

(23%)

(25%)

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

300

350

400

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011

Rs.

Cro

re

Gross Revenue and Growth

84

116 109

100

62

36%

42% 39%

30%

24%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

20

40

60

80

100

120

140

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011

Rs.

Cro

re

Operating Profit and Margin

Historical Trends


8

Quarterly Financial Performance

Continued moderation in electrode prices and rising input costs. A significant decline in interest expense during Q1 FY2011

FCCB outstanding is due on October 20, 2010

USD 3 million of FCCB’s were converted to shares during Q1 FY2011

Outstanding shares as of June 30, 2010 is 173,896,658

Total debt as percentage of equity remains at conservative levels

Significant financial flexibility available for future capacity expansions or inorganic acquisitions



Secured Debt 81 26

Unsecured Debt 32 33

FCCB 136 124

Total Debt 249 183

Less: Cash & Cash Equivalents (259) (290)

Net Debt / (Net Cash) (10) (107)

LTM Net Interest (1.05) (0.25)

Net Debt / LTM EBITDA1 n/a n/a

Note:1EBITDA includes other income

45

68 63

56

34

19%

23% 22%

16%

13%

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

60

70

80

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011

Rs.

Cro

re

Net Income and Margin

Historical Trends

Capital Structure


9

Strategic Initiatives

Electrode capacity expansion plan of 20,000 MT per annum

Continue to position Graphite India as the largest Indian producer of graphite electrodes

Key drivers are access to capital at competitive costs and anticipated improvement in electrode demand in the medium term

Eco-friendly advanced technology and greater energy efficiency

Cost of expansion expected to be Rs. 255 Crore, to be funded through internal accruals and debt. Additional capacity expansion of 9,500 MT at a low capex of Rs. 67.5 Crore, as compared to Rs. 187.5 Crore for the original expansion of 10,500 MT

Project completion by Q3 FY2011-12

Coal based thermal power plant of 50 MW capacity at Durgapur at an investment of Rs. 214 Crore

Power generation capacity to increase to 83 MW

Will enable Graphite India to further optimize its cost of production and increase its competitiveness in the global market

Company has applied for various statutory clearances

Project to be commissioned by Q4 FY2011-12

This power plant will meet 100% of the power requirements of the Durgapur Plant post expansion


10

Outlook

New orders of electrodes are expected to yield higher sales realizations

Increased sales volume due to traction in electrode demand in FY2011

Continued positive contribution of non-electrode businesses

Ongoing cost optimization efforts across all facilities and functions

Capacity utilization expected to increase to 70-80% in FY2011

Fully covered for needle coke requirements for FY2011

Revenues

Costs


11

Fact SheetCOMPANY BACKGROUND

Graphite electrodes are used in electric arc furnace (“EAF”) based steel mills and is a consumable item for the steel industry. The graphite electrode industry is highly consolidated with the top five major global players accounting for 75% of the high end UHP electrode capacity. Majority of this capacity however, is currently located in high cost regions like US, Europe and Japan. The manufacturing process, for the high end UHP electrodes is technology intensive and is a significant barrier for the entry of new players. Due to the global economic recession, demand for electrodes is currently less than total installed capacity of 1.2 million MT, of which UHP capacity is 0.9 million MT. Global steel production continues to recover post-recession. The EAF method of manufacturing steel is becoming increasingly attractive due to its low capital costs, lower breakeven tonnage, flexibility in locating plants closer to consumption points and significantly lower pollution levels than in the blast furnace steel plants. As a result, EAF production capacity has increased from 180 million tonnes or 25% of total steel production capacity in 1985 to an estimated 418 million MT or 34% of total steel production capacity in 2010.

INDUSTRY


12

S. ChaudharyGraphite India

[email protected]+91 33 2229 3792

Vikram RaoChurchgate Partners LLP

[email protected]+44 (0) 207 389 7914

Sudhir ShettyAdFactors

[email protected]+91-22-2281-3565

alvarajo [printed: november 3, 2008 1:46 pm] [saved: november 3, 2008 1:46 pm] s:\sungard\2008_11...

Documents

q1 fy2011 production

forward looking statements

q4 fy2011

q3 fy2011

chairman of graphite

q4 fy2010

financial performance

technological developments