HEG, a part of LNJ Bhilwara Group with diversified interest in power, graphite electrodes, textiles and IT services sector, has reported 21 per cent increase in net profit at Rs 770 crore on the back of strong demand for graphite electrodes from steel companies.
The company’s revenues grew over six-fold to Rs 1,595 crore (Rs 214 crore). EBITDA during the quarter under review was up multi-fold at Rs 1,196 crore (Rs 24 crore), a growth of 75 per cent compared with 11 per cent logged last year.
Ravi Jhunjhunwala, Chairman & Managing Director, HEG, said the graphite industry was buoyant given the structural changes that have been brought about because of macroeconomic factors. Due to tough entry barriers and being a highly capital intensive business, supply constraints are expected to continue till the foreseeable future, he said.
The steel industry is growing steadily globally and electric arc furnaces continue to take a more important place. However, there has not been much investment made to increase the supply of key raw material needle coke, which has also found new application in Lithium ion batteries.
"Given China’s war on polluting industries, we believe the current upsurge in global graphite electrode demand to sustain its momentum over the foreseeable future as the demand-supply gap is widening," he said.
HEG plans to increase the capacity to capitalise on the structural changes in the industry and looking to enhance the capacity by debottlenecking, Jhunjhunwala said.
HEG currently has a graphite electrode capacity of 80,000 tonnes, the largest single-site integrated graphite electrode facility globally. This plant, which is located at Mandideep, near Bhopal, exports over 70 per cent of its production to over 30 countries.
The company also operates three power plants of 77 MW capacity. The hydroelectric power plant at Tawanagar, district Hoshanabad (MP), has a rated capacity of 13.5 MW, while two captive thermal power plants located at Mandideep have 30 MW and 33 MW capacity, respectively.