### **Executive Summary** HEG Limited, a 53-year-old industrial pioneer and part of the diversified LNJ Bhilwara Group, continues to strengthen its position as a global leader in **graphite electrodes** while strategically expanding into **advanced carbon materials** and **clean energy technologies** through its subsidiaries. The company is undergoing a transformative phase marked by capacity expansion, technological diversification, and a proactive shift toward energy transition solutions, positioning itself for long-term leadership in both traditional and next-generation carbon markets. --- ## **1. Core Business: Graphite Electrodes – Market Leadership & Expansion** HEG remains the **third-largest global graphite electrode producer** and operates the **world’s largest single-site graphite electrode plant** at Mandideep, Madhya Pradesh, with a total capacity of **100,000 tons per annum (TPA)**—expanded from 80,000 TPA in 2023. This scale provides HEG with **among the lowest production costs globally**. - **Capacity Expansion (100,000 → 115,000 TPA)** - Announced in August 2025, this **INR 650 crore capex** project aims to increase capacity by 15,000 TPA by **Q1 2028**, further solidifying HEG’s cost leadership. - Funding via internal accruals and debt; driven by rising **Electric Arc Furnace (EAF)** steelmaking adoption. - **High Capacity Utilization** - Despite industry stagnation, HEG maintained **>90% utilization in Q3 2025**, far exceeding the **60–65% global (ex-China) average**. - Long-standing utilization at 80–85% underscores HEG’s operational efficiency and strong customer relationships. - **Global Market Position** - Exports **~70%** of output to over 35 countries. - Supplies **25 of the world’s top steelmakers**, reinforcing trust in product quality and reliability. - Dominant in **Ultra High Power (UHP)** and **High Power (HP)** segments; competes with Resonac, GrafTech, and Tokai Carbon. - **Strategic Advantage** - **No new entrants in the last 50 years** due to high technology barriers and needle coke constraints. - Recent **120,000-ton capacity reduction** in Western competitors (4 closures, 4 downsizings) has tightened global supply, creating a favorable market imbalance. - **No new capacity announced outside China**—gives HEG a 4–5 year first-mover advantage. --- ## **3. Strategic Growth via Subsidiary: TACC Limited** TACC Limited, a wholly-owned subsidiary of HEG, is spearheading the company’s entry into **advanced carbon materials**, particularly **lithium-ion battery graphite anodes** and **graphene**, marking a pivotal diversification into the energy transition and e-mobility space. ### **A. Graphite Anode for EVs & Energy Storage** - **India’s First Greenfield Anode Plant** - TACC is setting up a **20,000 TPA graphite anode plant** in **Dewas, Madhya Pradesh**, at an estimated cost of **₹1,850 crores**. - Scheduled to be **operational by 2027**, with potential to scale to **40,000 TPA** within 4–5 years. - Fully supported by **sustainable & renewable energy**, aligning with ESG and “Make in India” goals. - **Market Opportunity** - India currently **imports 100%** of its anode material. - Domestic anode demand forecast: **100,000–140,000 TPA by 2030**, driven by EV and PLI-backed battery manufacturing. - Anode powder can command **$5,000–$15,000/ton** (vs. ~$2,000 for electrodes), with **higher EBITDA margins** expected. - **Customers & Collaboration** - Engaged with **Tata, Reliance, Ola, Exide, and Amara Raja** for supply alignment. - Pilot plant (10 TPA/month) already active, supplying samples and co-developing customized anode solutions. ### **B. Graphene & Advanced Materials** TACC has established India’s first large-scale **graphene development platform** through a strategic partnership with **Ceylon Graphene Technologies (CGT)**. - **Joint Venture with CGT** - CGT (LOLC Group, Sri Lanka) brings expertise in high-purity **vein graphite-based graphene**. - TACC contributes **proprietary graphene synthesis** and carbon material know-how. - A **state-of-the-art graphene manufacturing facility** is being set up at TACC’s site in India. - **Applications** - Focus on **construction** (stronger concrete), **textiles**, **coatings**, **energy storage**, and **mobility**. - Collaborations: - **CRRI**: Graphene-enhanced roads for durability and carbon reduction. - **NCB**: Sustainable high-performance concrete using graphene additives. --- ## **4. Organizational Transformation: Demerger & New Entities** To unlock value and sharpen strategic focus, HEG is in the process of **demerging into two independent listed entities**: 1. **HEG Graphite Limited** - Focused on **core graphite electrode** business. - Includes 100,000 TPA plant, captive hydro power (20 MW at Tawa), and strong cash flow. - Targeted to be a pure-play industrial materials company. 2. **HEG Greentech Limited** - Platform for **future energy technologies**: - **TACC**: Graphite anodes and graphene. - **RePlus**: 1 GWh battery pack assembly (Pune), expanding to **5 GWh by 2025**. - **Bhilwara Energy Limited (BEL)**: Wind, hydro, and energy storage assets (300 MW run-of-river hydro project). - Backed by promoter track record and secured **INR 3,000 crore capex funding**. - Positioned as a **debt-free, diversified energy transition business**. --- ## **5. Strategic Challenges & Risks** - **Single-Plant Risk**: All graphite electrode production at Mandideep—vulnerable to disruptions. - **Commodity Exposure**: Reliant on **needle coke** (coal derivative); pricing and availability can impact margins. - **Geopolitical Headwinds**: Sanctions limit access to **Iran** (40,000–45,000 TPA market), while **U.S. tariffs** (10%) on graphite electrodes could affect exports. - **Power Costs**: Evaluating relocation to states with cheaper electricity (e.g., Odisha); currently sourcing from grid; 6 MW solar under development. --- ## **7. Innovation & R&D** HEG has a dedicated **R&D team** focused on: - Process innovation and carbon feedstock sustainability. - Development of **advanced carbon materials** for energy storage, thermal, and environmental applications. - Collaboration with research institutions for next-gen solutions. ---