GOA CARBON LIMITED - Q2 FY 2018-19- RESULTS REVIEW

GOA CARBON LIMITED

Q2 FY 2018-19 RESULTS REVIEW

GOA CARBON has presented depressing results for the second quarter ended Sep,2018.

Net Sales at Rs.113.33 CR is down 24.77% YoY and 9.1% QoQ. Actually, sales have been contracting right from Q4 of Last year ended in March 2017. Sales slid down from 187 cr in Q3 of last year to 161 cr in Q4 of last year and further down to 125 cr in Q1 of current year and now further down to 113 Cr in Q2 ended Sep,2018.

PBT has itself becomes Minus 1.76 Cr. Tax is -0.5 cr thus reducing the Net loss to -1.27 cr.

The company has not furnished any clear reasons for this continuous slide in sales and also in Profits.

There was a news that last quarter, there was a plant down for a few days. But, that cannot fully account for the huge slide down in sales and profits.

Last quarter down trend, it was thought as follows :

Capacity utilisation in Q1 has been to the tune of 76 percent (versus 71 percent in Q4 FY18) compared to nearly 100 percent in Q3 FY18.

Lower sales may be more on account of shipment delays as the management cites higher order backlog.

Does the Company really have huge order back log and if so, why is it not serving the order backlog?

The green coke raw material prices are stated to have increased. All this does not explain the huge slide down in Sales and profits in Q2 now adequately.

The notes to the latest Q2 results show the following status :

Note.3 : Due to the absence of viable export and domestic orders, the Plants of the Company were shut down during the quarter as under:

i) Goa plant : 42 days, ii) Bilaspur plant : 92 days, and ii) Paradeep plant : 19 days.

4) The Company's operation and its results fluctuate from period to period on account of :

a) the delivery schedule of the customers which vary from time to time;

b) the inability of  the Company to always increase selling prices in line with cost of imported raw material, the FOB price of which varies substantially from time to time; and

c) exchange fluctuations arising because of the company's dependence on imports of raw materials.

This reflects as serious situation and we do not see how the company will address it in future also.

On top of all these is the ban on import of petroleum coke for vacating which, the company has approached the Supreme court. The hearing will be on 09.10.18. We have to wait for the SC’s orders on the petition.

Thus, many factors are not clear in respect of the company results as on date. Whatever the company has stated in the results presents an adverse situation. 

Is it beyond the control of the company to correct it fast – is what the Management has to tell all.

*  *  *  E  N  D  *  *  *