Graphite India Ltd Management Discussions

(i) Industrys structure and developments

A. Graphite and Carbon Segment Graphite Electrodes

Graphite Electrode is used in electric arc furnace based steel mills for conducting current to melt scrap iron and steel and is a consumable for the steel industry. The principal manufacturers are based in USA, Europe, Middle East, India, China, South East Asia and Japan.

Graphite Electrode demand is primarily linked to the global production of steel in electric arc furnaces which is one of the three basic methods for steel production i.e. – [1] Bessimer Oxygen Furnace (BOF); [2] Electric Arc Furnace (EAF); and [3] Induction Steel Furnaces (ISF). According to the World Steel Association ("WSA"), global (excluding China) EAF steel production grew at a 2.3% compounded annual growth rate from 2015 to 2022, the most recent year for which WSA has published such figures. This compares to a 1% compounded annual growth rate for overall global (excluding China) steel production during this same period. As a result, the EAF method of steelmaking accounted for 49% of the global (excluding China) steel production in 2022, compared to 44% in 2015, with increasing share of growth in nearly every region.

EAF steelmaking is more energy efficient and is beneficial in terms of its low carbon footprint, compared to steel produced through the BOF steelmaking model. According to the Steel Manufacturers Association ("SMA"), EAF steelmaking produces 75% fewer carbon dioxide emissions compared to BOF steelmaking. Further, SMA notes that the EAF process is a sustainable model for recycling scrap-based raw materials into new steel, which is 100% (and infinitely) recyclable at the end of its useful life. In addition to these advantages, EAF steel producers benefit from their flexibility in sourcing iron units, being able to make steel from either scrap or alternative sources of iron, such as Direct Reduced Iron (DRI) and Hot Briquetted Iron (HBI), both made directly from iron ore. Chinas share in EAF production, which was only 10.1% of global steel making till 2023, aims to make 15% by 2025 and is estimated to become higher going forward as per S&P Global report.

Reflecting on these positives and other strategic advantages, the EAF based steel production is expected to grow at a faster rate than BOF steel production. Based on industry announcements on proposed additional EAF steel capacities, this could result in global (excluding China) EAF production capacity increasing at approximately 3% compounded annual growth rate from 2022 to 2030. This should translate into similar increase in demand for UHP graphite electrodes over this same period to support EAF capacity expansion, besides further potential graphite electrode demand from production increases at existing EAF steel plants to support overall expected growth in steel demand.

Calcined Petroleum Coke and Paste

Graphite Indias Coke plant in Barauni, Bihar, specializes in the manufacturing of Calcined Petroleum Coke (CPC), Carbon Paste and Electrically Calcined Anthracite Paste. This facility represents one of the companys key backward integration initiatives. The plant manufactures two grades of CPC - aluminium and graphite. CPC plays a crucial role in various industries, including the manufacturing of anodes for aluminium smelters, graphite electrodes and as a carburiser in steel production. Additionally, the division manufactures four grades of Paste, i.e. Electrode Paste based on either CPC or Electrically Calcined Anthracite Coal (ECAC) and Tamping Paste derived from either CPC or ECAC. Electrode Paste is primarily utilised in Ferro Alloy Smelters while Tamping Paste serves as a lining material in submerged arc furnaces.

The division has delivered satisfactory performance despite tough market conditions. With significant correction in raw material prices, the division anticipates stronger demand and improved margins.

Impervious Graphite Equipment (IGE)

IGE Division is in the business of design, manufacture and supply of Impervious Graphite Heat and Mass Transfer Equipment and Turnkey systems. It has an integrated facility for process/product design, manufacturing, inspection and providing supervision during erection and commissioning activities.

Impregnated graphite is an ideal material of construction for corrosive applications in sectors like Chloro-Alkali, Crop protection agrochemicals, Chlorinated Organic, speciality

& fine Chemicals, Phosphoric Acid, Fertilizers, Rayon, Steel Pickling, Metal Processing, Polymers, Drug Intermediates, Batteries & Gelatine etc.

The Company has built the product line into a reliable brand with a reputation for prompt service, good quality and consistent performance by investing in strengthening its core competencies. This division is capable of meeting any country specific design and has obtained many certifications relevant to the product profile. The total sales of the division improved compared to last financial year.

The new IGE expansion project at Gonde has become operational from March 2024. This will increase capacity for IGE division which will help to service larger markets in India and exports in future. The machine shop for the same is already operational at Gonde Plant since July 2023.

B. Other Segments

Glass Reinforced Plastic Pipes (GRP)

GRP Division is engaged in manufacturing of large diameter Glass Fibre Reinforced Plastic Pipes suitable for municipal application, seawater, effluent, irrigation, penstock as well as Pipe-liners for rehabilitation of old pipes/ducts by trenchless technology in metro cites. Product is manufactured by the Continuously Advancing Mandrel Filament Winding Process with computerized advanced technology comparable to other plants worldwide. The plant operations are dependent upon tenders floated by government / semi-government authorities which have been virtually absent during the year. Currently the division does not foresee much demand in the near future and as such part of the facility has now fruitfully been utilized for IGE expansion.

Steel

Powmex Steels Division (PSD) is engaged in the business of manufacturing high speed steel and alloy steel having its plant at Titilagarh in the State of Orissa. PSD is the single largest manufacturer of High Speed Steel (HSS) in the country. HSS is used in the manufacture of cutting tools such as drills, taps, milling cutters, reamers, hobs and broaches. HSS cutting tools are essentially used in – (a) automotive; (b) machine tools; (c) aviation; and (d) retail market. The industry is characterized by a single good quality manufacturer of HSS i.e. PSD which faces competition from small domestic producers and cheap imports from overseas manufacturers.

The performance of the division has been quite satisfactory during FY 2023-24 with increased level of sales and productivity. The division has been able to restart export of HSS during this year.

18 MW Hydel Power

The Company has an installed capacity of 18 MW of power generation through Hydel route in Chunchunkatte, near Mysore. The power generated through this Unit is being sold to third parties. The performance of this division was weak due to significantly lower generation. Another 10 MW capacity is being added to this CCKT Unit - 5 MW Solar and 5 MW Hydel. Solar is expected to be commissioned by Q1 of FY 2024-25 and Hydel by June, 2025.

18.9 MW Wind Power

Work on 18.9 MW wind power plant at Nandurbar (Maharashtra) is going on. Five Wind Turbines have since been commissioned. Remaining four will be commissioned by Q1, FY 2024-25. This will significantly bring down power cost for Nashik plant and will reduce carbon emission.

(ii) Opportunities and threats

As per WSA, the volume of global crude steel marginally receded in 2023, reaching 1,849.7 million tonnes (MT), marking a marginal decrease of 0.1% relative to the preceding year. Meanwhile, India retained its status as the worlds second-largest steel producer, with crude steel production raising to 140.2 MT, an increase of 11.8%. The hike in domestic steel consumption, registered a considerable escalation to 132.7 MT from 116.2 MT in 2022 and is attributed to increased infrastructure activities. The production of finished steel also had an increase by 12.4% to 134.9 MT. This has enabled India to contribute to 7.6% to the global crude steel production over the year.

The leading steel manufacturer, China continued its dominance in global crude steel production with an output of 1,019.1 MT in 2023, constituting to 55.1% of the global aggregate for the year. Among the foremost steel-producing nations, India, the United States, Russia, South Korea and Iran also had a growth in their production levels during 2023. While Chinas production levels remained stable, other nations within the top 10 observed a reduction in output over the same period.

In the Asian region, Asian crude steel production reached 1,361.2 MT in 2023, a modest increase of 0.7% from the prior year, primarily owing to contributions from China and India, which accounted for 75% and 10% of the total Asian production, respectively. Outlook for Steel demand in China for 2024 is projected to remain at 2023 levels. The decline in real estate investments is being compensated by additional investments in infrastructure and manufacturing sectors. For 2025, a 1% downtrend in Chinas steel demand is anticipated.

For India, the immediate opportunities encompass: (a) higher government and private sector investment in infrastructure; (b) this higher investment will propel an increase in domestic consumption; (c) the Production Linked Incentive (PLI) scheme for specialty steels, intended to invigorate the sector; (d) Indias objective to expand crude steel capacity to 300 million tonnes per annum (MTPA) and target a crude steel production of 255 MTPA by 2030-31 and (e) The acceleration of global initiatives for decarbonization or efforts to fortify public infrastructure in light of climate change risks, which are likely to underpin future steel demand.

Potential short-term challenges include:

(a) A projected slight slowdown in the global economy in 2024, though the potential for a significant downturn has reduced despite elevated debt levels and uncertainties regarding interest rates; (b) Fluctuations in the cost of raw materials that may significantly influence production expenses, operational margins, and profitability; (c) The downturn in the real estate sector and governmental interventions to overcome its effects present risks to the Chinese economy. Nonetheless, proposed reductions in production and an uptrend in domestic demand in China could lead to an increase in steel prices; (d) Regional tensions, such as the ongoing conflict between Russia and

Ukraine and the conflict in Israel and the Middle East regions, contribute to rising oil prices and further geo-economic confrontations, disrupting conventional trade flows.

Graphite India is one of the leading producers of graphite electrodes globally by capacity. The company has over 60 years of proven technical expertise in the industry and manufactures full range of graphite electrodes, with focus on the large-diameter, ultra-high power (UHP) electrodes preferred by the large steel manufacturers. It is therefore well positioned to meet the growing demand for electrodes from both domestic and international Electric Arc Furnace steel manufacturers.

(iii) Segment-wise Performance Revenue of the Company

The revenue from operations amounted to Rs. 2,894 crore as against Rs. 2,913 crore in the previous year.

Aggregate Export Revenue of all divisions together was Rs. 989 crore as against Rs. 867 crore in the previous year.

Graphite and Carbon Segment

The performance of the segment was dismal in FY 2023-24 as compared to FY 2022-23 due to lower realization and higher costs despite higher volume of production and sales.

Production of Graphite Electrodes and Other Miscellaneous Carbon and Graphite Products during the year under review was 80,627 MT as against 63,709 MT in the previous year.

Production of Calcined Petroleum Coke during the year was 45,098 MT as against 46,870 MT in the previous year.

Production of Carbon Paste during the year was 3,033 MT against 3,571 MT in the previous year.

Production of Impervious Graphite Equipment (IGE) and spares during the year was 2,010 MT as against 2,100 MT in the previous year.

The segment revenue remained flat at Rs. 2,673 crore from Rs. 2,679 crore in the previous year. Segment recorded loss of Rs. 112 crore in FY 2023-24 compared to profit of Rs. 392 crore in FY 2022-23 due to lower realisaiton and loss on inventory.

Sale of Land at Bengaluru

During the year the Company sold its land at Whitefield, Bengaluru for an aggregate consideration of Rs. 986 Crores to two wholly owned subsidiaries of Tata Realty and Infrastructure Limited against which the entire consideration was received.

Other Segments

GRP division produced 867 MT pipes as against 626 MT in the previous year.

Production of HSS and Alloy Steels was 2,865 MT during the year as against 2,701 MT in the previous year. Power generated from Hydel Power Plant of 18 MW capacity amounted to 25.84 million units during the year as against 56.59 million units in the previous year. 14.63 million units were sold during the year as against 105.68 million units in 2022-23.

(iv) Outlook

India has established itself as the strongest driver in the growth of global steel since 2021. The industry experts predict the Indian steel demand will continue its upward trajectory with an estimated 8% annual growth in 2024 and 2025. This growth is primarily supported by continued advancements in sectors that utilize steel, with a significant emphasis on infrastructure investments. Predictions indicate that by the year 2025, Indias demand for steel will increase by approximately 70 MT compared to the figures recorded in 2020, signaling a robust phase of industrial expansion and economic development.

Currently, Indias steel production capabilities have, surpassed 161 MT. This includes 67 MT produced through the blast furnace-bessimer oxygen furnace (BF-BOF) route, 36 MT via electric arc furnaces (EAF), and 58 MT through induction steel furnaces (ISF). Aligned with the National Steel Policy, India is on a strategic path to enhance its total crude steel capacity to 300 MTPA and aims to elevate total crude steel demand and production to 255 MTPA by the FY 2030-31. The surge in domestic consumption can be attributed to the governments substantial investment in infrastructure, as demonstrated by the allocation of Rs. 9.5 lakh crores for infrastructure projects in FY 2023-24. This commitment is further reinforced with an allocation of Rs. 11.11 lakh crores in the interim budget for FY 2024-25, ensuring sustained support for the nations infrastructure development initiatives.

On the global front, projections indicate a notable decrease in Chinas steel demand by the year 2025. This projection is also in line with the view that China might have reached its peak steel demand, and the countrys steel demand is likely to continue to decline in the medium-term, as China gradually moves away from a real estate and infrastructure investment dependent economic development model. Other emerging regions such as MENA and ASEAN are expected to recover in their steel demand during 2025, following a period of significant slowdown. However, challenges in the ASEAN region, including political instability and a decline in competitiveness, might result in a reduced growth trend for steel demand.

The developed economies are also expected to show a strengthening recovery with 1.3% in 2024 and 2.7% in 2025. This expected increase is due to a significant increase in steel demand in the EU by 2025 and continued stable economies in the US and Japan.

Global steel demand in 2023 faced challenges due to a slowdown in manufacturing activity caused by high costs, tight financing conditions, and weak global demand. However, leading economic indicators now signal the start of a recovery phase in global manufacturing activity in 2024. The automotive sector was an exception to the prevailing trend of manufacturing weakness. The recovery was driven by pent-up demand and improvements in supply chain constraints. Following a year of strong growth across major auto-producing nations, growth in 2024 is anticipated to be modest.

Investments in manufacturing facilities and public infra-structure have played a crucial role in supporting global steel demand in 2023. These investments, driven by the strategic objectives of major economies to develop essential sectors and ensure supply chain security amidst growing geopolitical tensions, underline the 2023 trends. This paradigm, reflective of the strategic imperatives of 2023, underscores the intricate relationship between industrial policy, economic strategy, and global supply chain dynamics. The transition towards a sustainable global economy necessitates a transformative economic shift, significantly influencing investment in public infrastructure.

Investments aimed at strengthening infrastructure to withstand climate change and rebuilding areas affected by natural disasters significantly contributed to steel demand in several leading steel-consuming countries in 2023, including Japan, China, Korea and Turkey.

Anticipated continued investment in infrastructure and manufacturing faces challenges from rising costs and labour shortages, potentially limiting growth. However, easing monetary policies could boost sectors consuming steel, especially housing. Enhanced global efforts towards decarbonization and improving public infrastructure to mitigate climate change risks are expected to positively influence global steel demand in the future.

Investments in decarbonization and dynamic emerging economies will increasingly drive positive momentum for global steel demand, even as Chinas contribution to global growth diminishes. The steel industry is transitioning towards EAF manufacturing. This shift, driven by its lower carbon footprint compared to traditional blast furnace steelmaking, is expected to drive long-term demand growth for graphite electrodes.

(v) Risks and Concerns

Exports to specific regions could be significantly impacted by protective trade measures such as severe import duties, anti-dumping duties, countervailing duties or sanctions potentially leading to major reductions in our export volumes to these markets. Additionally, the ongoing geopolitical conflict in the Middle East, along with other regional geopolitical tensions, could further exacerbate the situation, posing additional challenges to our international trade operations. The dynamic nature of these geopolitical and economic landscapes necessitates vigilant monitoring and flexible adjustment of export strategies to mitigate potential adverse effects.

During the past year, the international freight industry continued to navigate the after-effects of the pandemic and the geopolitical tensions, particularly due to the conflict in the

Middle East. These factors previously led to a stagnation in global trade, escalated freight costs and extended transit times due to a demand-supply imbalance, container shortages, and congestion at major ports. Despite these challenges, the latter half the current year anticipates improvements. Initiatives include introducing new containers and vessels with increased capacity and diverting traffic to mid-size ports to alleviate congestion. These efforts aim to narrow the demand-supply gap, though significant reductions in freight costs are not expected immediately. Additionally, a shift towards regional trade strategies is emerging as companies seek to contain freight costs, indicating a potential long-term transformation in global supply chain dynamics.

The Graphite business is significantly linked to the cyclical globalEAFsteelindustry,whichisinfluencedbyglobaleconomic conditions. The EAF steel sector primarily serves industries like automotive, construction, machinery, equipment, and transportation, all of which are susceptible to macroeconomic shifts. Instabilities or downturns in these sectors could negatively impact the demand for graphite electrodes. The pricing of graphite electrodes has historically mirrored the EAF steel industrys demand and graphite electrodes supply, with periods of overcapacity leading to adverse pricing effects. An escalation in global graphite electrode production capacity, surpassing the growth in demand, could detrimentally influence graphite electrode prices. Excess production capacity might compel manufacturers to export electrodes at reduced prices, potentially below production costs, exerting downward pressure on prices. This scenario could adversely affect sales, margins, and profitability, highlighting the necessity for strategic management of production capacity and market demand alignment to safeguard the companys financial stability and market position.

The Companys performance is closely tied to the availability and cost of superior grade petroleum needle coke, a critical raw material in graphite electrode production. Disruptions in supply could significantly affect the business. Historically, graphite electrodes pricing has been correlated with the cost of petroleum needle coke, especially in markets with tight demand, reflecting its substantial share of raw material costs. Additionally, the financial stability of major steel producers, poses a risk, as it may impact the receivables. The Company, with balanced exposure to exports and imports, faces potential impacts from foreign currency market volatility. However, the inherent natural hedge through diversified exposures could partially offset this risk. In the graphite industry, competition is based on price, product quality/ performance, delivery reliability and customer service, with graphite electrodes experiencing intense price competition. Adapting to these dynamics is crucial for maintaining the Companys competitive edge and financial stability.

(vi) Internal control systems and their adequacy

The Company has proper and adequate systems of internal controls. Internal audit is conducted by outside auditing firms. The Internal audit reports are reviewed by the top management and the Audit Committee and timely remedial measures are enabled. IT Security Policy is in place to ensure that the risks associated with non-compliance of information gathering, processing, security (against cyber crimes) and preservation are assessed and adequately and ably managed. The purpose and objective of the policy is to address the risks by defining, developing and implementing adequate controls through proper categorization. An internal committee reviews the adherence and suggests any changes are required. Independent systems audit is performed by TUV Nord, India. Third party product inspections are performed by agencies like SGS, BV India.

(vii) Discussion on financial performance with respect to operational performance

Revenue from Operations recorded Rs. 2,894 crore as against Rs. 2,913 crore in the previous year. Profit after tax was Rs. 872 crore as against Rs. 350 crore in the previous year. Profit before tax was higher at Rs. 1,079 crore as compared to Rs. 476 crore in the previous year which includes onetime gain on sale of land at Bengaluru for Rs. 954 crore. Borrowing at Rs. 96 crore was lower than Rs. 335 crore as compared to previous year and the Finance Cost increased to Rs. 12 crore from Rs. 9 crore in the previous year. Capital expenditure during the year amounted to Rs. 258 crore as against Rs. 156 crore in the previous year.

ICRA has reaffirmed the long term rating at [ICRA] ‘AA+ (pronounced ICRA double A plus) with stable outlook. The short-term debt programme rating has been reaffirmed at [ICRA] A1+ (pronounced ICRA A one plus). This rating indicates highest-credit-quality. The retention of these ratings reflects comfortable financial risk profile characterized by low gearing, strong coverage indicators and the financial flexibility emanating from large liquid investment portfolio. Details of contingent liabilities are given in Note 34 to the Financial Statements.

(viii) Material developments in Human Resources / Industrial Relations front, including number of people employed

The Companys HR policies and practices continue to focus on contemporary as well as pragmatic people centric initiatives. New policies are being formulated vis-?-vis Environmental Social Governance (ESG) and Business Responsibility & Sustainability Report (BRSR).

While designing these policies, special attention is given to Companys vision as well as changing needs. Optimal utilisation of people and periodic review of the organogram is addressed continuously. The HR function has actively participated in formulation of ESG policy of the Company and an HR person from each of the plant / location is being trained on ECOVADIS, a platform where all ESG related processes are being uploaded/ maintained.

Training and development programs are specifically targeted to address Companys progressive needs with focus on behavioral part of the training. Formulation of unit-wise training, calendar basis training need, identified are being held by in-house resources, mainly on the technical part. Safety plays a major role in the success of any organization and the Company recognizes the same. Hence, emphasis has been given to adopting and maintaining best safety practices across the units and periodic audit of the same.

Multiskilling and multitasking of employees are achieved through suitably designed training modules as well as rotation through different job roles. This ensures a mix of learning, innovation and excellence leading to continual improvements. Company considers its employees as an intelligent and responsible resource for effectively and optimally managing other material resources like money, machines and materials. Hence, productive and effective engagement of all resources at various levels is critical to achieve Companys objectives of cost optimisation, profitability as well as business growth. This is critical in ensuring the interests of all stakeholders. Specific initiatives are being taken to develop successors to key roles. Emphasis is given to improve the foundational understanding of leadership competencies of Team Building, Lateral Thinking, Influencing Outcomes and Problem Solving. Engagement with local bodies, union leaderships and the local communities are done on a periodic basis in order to maintain seamless and smooth functioning of the Units.

The total number of permanent employees in the Company is 1,694 as on 31st March, 2024. The employee relations continue to be cordial and harmonious at all the locations of the Company.

(ix) Occupational Health and Safety

Internal Safety Audits are conducted at regular intervals at plants. Audit observations relating to unsafe acts, practices, conditions are discussed in "Corrective and Preventive Action" meetings. Protection and safety of our personnel and assets are our top priority. We believe in in-depth investigation of unfortunate accidents, if any, so that root causes are identified and corrective and preventive measures are undertaken. Consultation and participation of workers and statutory bodies are encouraged.

Health, Safety, Environment and Quality policies are in place and are audited by external agencies. Safety Audit once in two years, as specified, is carried out by External Safety Auditors. Every year health check-up of all employees is being carried out by competent medical professionals.

Environmental, Social and Governance (ESG)

ESG performance of a business is its corner stone in creating long term value. It can represent risks and opportunities that will impact Companys ability to create value. This includes environmental issues like climate change and scarcity of natural resources. It covers social issues like human capital practices, diversity, health and safety, community relationship and value chain engagement. It involves governance matters that includes performance of the board, ethical practices, disclosures and transparency. The Company has been practicing the principles of ESG for the last couple of years and have made significant progress in the journey of excellence while creating value through ESG. Some of the highlights of this journey are: (a) Achieving major reduction of Energy, Greenhouse Gas (GHG) and Water intensity year on year over last two years; (b) Obtained GHG emissions (Scope 1, 2 and 3) verified by an independent credible agency.

(c) Started participating in CDP Climate disclosure and in the very first year (2023) achieved a credible score of ‘B- which makes us a member of globally recognized limited number of companies who have demonstrated evidences of managing environmental impact. The Company will strive to score better going forward.

(d) Registered with SBTI (Science Based Targets Initiative) and have committed to reduce GHG footprint to support global Climate Action and move towards Net Zero. (e) Made ESG disclosures through Business Responsibility and Sustainability Report (BRSR) as mandated by SEBI and will continue to do so every year as per the mandate. (f) Disclosed our ESG Report with stakeholders (through our website) and will continue to do so every year. (g) Carried out an assessment of Climate Change related Risks and Opportunities in business as per recommendations of TCFD. The report is available on Companys website. The Company is planning measures to reduce this risk.

(h) Conducted energy audit of major facilities through a globally recognized agency and implementing the energy management initiatives identified through this study. (i) Obtained Environmental Management System certification ISO 14001 and Occupational Health & Safety Management System certification ISO 45001 for electrodes plants in Durgapur (West Bengal) and Satpur (Maharashtra).

(j) Implemented a process of sustainable supply chain covering about 80% of our suppliers by value. This included aspects like: i. Supply chain policy; ii. Supplier code of conduct aligned to the principles of responsible business conduct; iii. Periodic assessment.

Plan for the year 2024-25 includes the following, among others: (a) Continue the initiatives and disclosures started in last year;

(b) Obtain ECOVADIS score. ECOVADIS has emerged as a widely used supplier ESG assessment platform and some of the customers are requesting us for ECOVADIS score. The Company sees this to be a growing trend and hence decided to develop systems and processes that would help to achieve a good score; (c) Improve our gender diversity; (d) Share ESG performance with stakeholders, including employees and value chain partners, through focused outreach events.

(x) COVID-19: Measures Undertaken

In view of the current improved situation, most of the protocols relating to COVID-19 have been withdrawn/reduced.

(xi) Significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with explanations are as under:

Sl. No. Particulars	2023-24	2022-23	Improvement / (deterioration)
1 Inventory Turnover	154	274	43.80%
- (Revenue from Operations / Inventory)
- (Days)
2 Interest Coverage Ratio -	*17.94	46.47	(61.39)%
(PBIDT / Finance cost)%
3 Current Ratio – (current assets / current liabilities)	4.90	3.33	47.19%
4 Debt Equity Ratio-(Debts / Total Equity) - Times	0.02	0.07	(78.38)%
5 Operating Profit Margin - (PBDIT / Total Revenue)%	*6.52	17.42	(62.57)%
6 Net Profit Margin - (PAT / Total Revenue)%	30.12	12.01	150.71%
7 Return on Net worth - (PAT / Net worth)%	16.31	7.54	116.31%

* Does not include exceptional income of Rs. 954 crore.

Explanations :-

The Companys operating profit margin has detoriated principally due to lower realization owing to subdued demand for Graphite Electrodes and increased cost. However, net profit margin and return indicators have shown substantial improvement due to profit for sale of Bengaluru land. Inventory Days have also reduced substantially with tight inventory management

Transaction of the Company with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity is given below:-

Emerald Company Private Limited (ECPL) (An entity of the promoter Group holding 61.33% of the share capital).

	2023-24	2022-23
	(Rs. Cr.)	(Rs. Cr.)
Dividend Paid	101.85	119.82

Research and Development

The Companys R&D commitment towards continual improvement, development of technology and development of import substitute materials is in line with the Government of Indias ‘Make in India policy and has consistently supported the Company in becoming one of the best quality and low cost producers of graphite electrode and carbon material.

R&D initiatives are in the area of new product development, raw materials, productivity, process development, reduction in carbon emission, etc.

Continuous efforts are made to develop import substitute materials for Aeronautical, Aerospace, Railway and other industrial applications. Continual process development activities are towards producing superior version of carbon brake pads for aircrafts and helicopters.

These R&D efforts were continuous and by benchmarking the operational efficiencies of manufacturing facilities at different locations, steps were taken for process improvement and achieving operational synergies. The focus is on further development and upgrading of standards/norms.

The Companys R&D efforts are primarily focussed towards developing import substitutes for Aeronautical, Aerospace, Railway and other industrial applications.

Subsidiary Companies

Carbon Finance Limited is a wholly owned Indian subsidiary. Graphite International B.V. (GIBV) in The Netherlands is a wholly owned overseas subsidiary Company which is the holding company of four step down subsidiaries in Germany (viz) Graphite Cova GmbH, Bavaria Electrodes GmbH-in liquidation, Bavaria Carbon Specialities GmbH, Bavaria Carbon Holdings GmbH and one step down subsidiary in USA (viz) General Graphene Corporation. Due to weak European economy fueled by the Russia Ukraine conflict has led to an unprecedented increase in energy and gas costs rendering German electrode operations unviable. The Group had decided in FY 2022-23 to shut down its German graphite electrode production while restructuring speciality and coating operations as they were not so energy intensive and initiated liquidation of one step down subsidiary, Bavaria Electrodes GmbH-in liquidation, with effect from 1st October, 2022 which is ongoing.

The overseas subsidiaries recorded a turnover of Euro 15.15 million (Mn) as compared to Euro 37.95 Mn in the previous year. During the year, the loss of Euro 6.60 Mn was lower against loss of Euro 18.11 Mn in the previous year.

The Company, by way of Royalty, earned Rs. 0.45 crore during the year, as against Rs. 3.21 crore in the previous year, from overseas subsidiary.

GIBV has made further investment of USD 4.0 Mn in General Graphene Corporation (GGC) and total investments stood at USD 22.60 Mn as on 31.03.2024 which constitute 60.93% of capital.

Associate Company

The Company has invested Rs. 50 Crores in 2,49,044 compulsory convertible preference shares and 100 equity shares of Godi India Private Limited (GIPL). The investment resulted in the Company holding 31% of equity/equity equivalent on a fully diluted basis.

GIPL is a start-up company having its registered office in Telangana - incorporated on 28.01.2020. GIPL is engaged in research & development of advanced battery technologies, with high energy and power densities (Li-ion Batteries, Na-ion Batteries, All Solid-State Batteries) by using environmentally friendly electrode making processes for a variety of applications across automobiles, consumer electronics, renewable energy storage, and strategic sectors. It has also developed Supercapacitors for a wide range of applications. The Company is at the development stage & has not yet commenced commercial operations of any product.

Other Information

No Company has ceased to be a subsidiary of the Company during the year.

Statement containing salient features of the financial statements of subsidiaries is enclosed - Annexure 1.

The Consolidated Financial Statements of the Company along with those of its subsidiaries prepared as per IndAS 110 forms a part of this Annual Report.

Information pursuant to Section 134 of the Companies Act, 2013 a. Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return as on 31st March 2024 is available on the Companys website on http://ir.graphiteindia.com/ b. Five meetings of the Board of Directors of the Company were held during the year on 30th May 2023, 10th August 2023, 20th October 2023, 9th November 2023 and 14th February 2024. c. All the Independent Directors of the company have furnished declarations that they satisfy the requirement of Section 149 (6) of the Companies Act, 2013. d. Relevant extracts of the Companys policy on directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in section 178(3) of Companies Act, 2013 is enclosed -

Annexure 2. e. There is no qualification, reservation or adverse remark or disclaimer made by the statutory auditor in his audit report and by Company Secretary in practice in the secretarial audit report and hence no explanations or comments by the Board are required. No fraud has been reported by Statutory Auditors. f. Particulars of loans, guarantees or investments under Section 186 of Companies Act, 2013 is enclosed -

Annexure 3. g. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of Companies Act, 2013 is enclosed - Annexure 4. h. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed – Annexure 5. i. Risk management policy has been developed and implemented. The Board is kept informed of the risk mitigation measures being taken through half yearly risk mitigation reports / Quarterly Operations Report. There are no current risks which threaten the existence of the Company. j. Corporate Social Responsibility (CSR) As part of its CSR activities, the Company has initiated several projects (as permitted by the CSR provisions) aimed at promoting education, employment enhancing vocational/employability skills, livelihood enhancement projects, healthcare initiatives, rural development projects, sports training etc. as detailed in the CSR annual report for the year ended 31st March, 2024 which forms part of this report – Annexure 6. The CSR policy has been displayed on Company website www. graphiteindia.com and can be viewed under the head CSR. k. Formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors on the basis of a set of criterias by the Nomination and Remuneration Committee/Board. l. The Company has adopted a Vigil Mechanism which has been posted on the Companys website www. graphiteindia.com and can be viewed under the head Corporate Governance. m. The Company does not accept deposits from public. n. There were no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.

Disclosures pursuant to Section 197(12) of Companies Act, 2013 read with Rule 5(1), Rule 5(2) and Rule 5(3) of Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014 are contained in Annexures 7 and 8. o. Dividend Distribution Policy has been posted on the Companys website www.graphiteindia.com and can be viewed under the head Corporate Governance.

DIRECTORS

Mr. P. K. Khaitan, Mr. N. S. Damani and Mr. N. Venkataramani ceased to be directors of the Company with effect from close of business hours on 31st March 2024 on cessation of their second term of five years as Independent Directors. Mr. Rahul N. Baldota and Mr. Hash Pati Singhania were appointed as Independent Directors for a term of five years with effective 01st April 2024. Shareholders approval for the said two appointments were obtained through postal ballot on 28th March, 2024.

Mr. K K Bangur (DIN: 00029427) retires by rotation in the forthcoming AGM and being eligible offers himself for re-appointment.

No director is related inter-se to any other director of the Company.

Recognition/Award and Certificates

The Company continues to enjoy the status of a Four-Star Export House. This year the Company has received the following awards for export performance:

- FIEO Eastern Region:

7th Export Excellence Award 2018-19 8th Export Excellence Award 2019-20

The Company has accreditation for the standards ISO: 9001, 14001 and 45001.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors state that - (a) In the preparation of the annual accounts, the applicable accounting standards had been followed; (b) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; (c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) The directors have prepared the annual accounts on a going concern basis; (e) The directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Corporate Governance Report

A Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this Report - Annexure 9

Business Responsibility and Sustainability Report (BRSR) forms part of our Annual Report. Annexure 10

Auditors

S. R. Batliboi & Co. LLP, Chartered Accountants, was re-appointed as Auditors of the Company for a second term of five (5) years at the 47th AGM held on 5th August, 2022. They have confirmed that they are not disqualified from continuing as Auditors of the Company.

Cost Auditors

The Company had appointed following Cost Auditors for FY 2023-24 who will conduct cost audit in respect of accounts and records made and maintained by the Company as required u/s 148(1) of Companies Act, 2013 as detailed below -

Shome & Banerjee	Electrode plant at Durgapur and Power generation facilities at Chunchanakatte.
Deodhar-Joshi & Associates	Electrode, IGE and GRP plants at Nashik
B G Chowdhury & Co. N Radhakrishnan & Co.	Coke division at Barauni Powmex Steels division at Titilagarh

Consolidated Cost Audit Report for FY 2022-23 was filed with the Ministry of Corporate Affairs, Government of India, on 29th August, 2023. The above Cost Auditors have been appointed to conduct cost audit for the same divisions as mentioned above for FY 2024-25.

Secretarial Audit/Compliance Report

Secretarial Audit Report and Secretarial Compliance Report for FY 2023-24 received from M/s. Bajaj Todi & Associates, Practicing Company Secretaries are annexed herewith -

Annexure 11 and 12.

Secretarial Standards

The Company is in compliance of all applicable Secretarial Standards as specified by the Institute of Company Secretaries of India.

Prevention of Sexual Harassment of Women at Workplace

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

Acknowledgement

Your directors place on record their appreciation of the assistance and support extended by all government authorities, financial institutions, banks, consultants, solicitors and shareholders of the Company. The directors express their appreciation of the dedicated and sincere services rendered by employees of the Company.

	On behalf of the Board
	K. K. Bangur
	Chairman
May 7, 2024	DIN : 00029427