Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Loss of production for more than a month due to COVID-19 lockdown and continued production at lower capacity utilization has impacted Electrotherm India’s profitability and finances. Production is expected to normalise in Q2FY2021, according to the company’s COVID-19 impact report.



Electrotherm expects demand for rebars to revive slowly. End-user sectors of rebar, infrastructure and housing are severely impacted by the shortage of labour. For its Ductile Iron (DI) pipes segment, Electrotherm has a good order book position from government projects and expects increased government investments in water infrastructure to support the company’s capacity utilization.


COVID-19 impact

Production at Electrotherm’s plants in Palodia, Samakhiyali and Vadodara were temporarily suspended on March 24 following the imposition of a nation-wide lockdown in India. Operations were resumed in a staggered manner from April 20 onwards. All three plants in Gujarat were operations by May 11 after securing permissions from local authorities.


Demand for the company’s products is expected to be lower in the short term. Limited manpower and logistics challenges caused by the lockdown restrictions have impacted the company’s production post the easing of the lockdown. Production at Electrotherm’s subsidiary, Hans Ispat is stalled from March onwards. The operations are yet to resume due to lack of labourers at the units.


Liquidity and debt

The company is facing short-term liquidity crunch as operations at all sites have been impacted by the pandemic. There is a shortfall in working capital which is further affecting the company’s cash flows. Electrotherm is hopeful of overcoming the liquidity crunch over the long run as the company reaches operations at optimum levels, said the report.


Electrotherm has negotiated debt financing arrangements with a majority of its lenders. The company has requested lenders to grant the COVID-19-related moratorium announced by the Reserve Bank of India. 



In Q4FY2020, the company’s revenue from operations slumped by 19pc to Rs6,875.1mn ($92.13mn) from Rs8488.1mn in Q4FY2019. Electrotherm reported a net loss of Rs3925mn in Q4 compared to a net profit of Rs7216mn in the prior year quarter. For the full year revenues dipped by 27pc to Rs25.24bn from Rs34.62bn in FY2019. In FY2020, net profits dipped to Rs449.8mn from Rs1,407.9mn a year ago.



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