Good afternoon, everyone, and welcome to the Q4 FY '26 HEG Limited earnings conference call. We have with us today the management team represented by Mr.

Ravi Jhunjhunwala, Chairman, Managing Director and CEO, and Mr. Riju Jhunjhunwala, Vice Chairman; Mr.

Manish Gulati, Executive Director; Mr. Om Prakash Ajmera, Group CFO; Mr.

Ravi Tripathi, CFO, HEG Limited; Mr. Puneet Anand, Group CSO; Mr.

Salil Bawa, Group Head, Investor Relations. Apart from this, we have HEG Greentech team as well for any queries on that.

With much ado about on this, I hand over the call to Mr. Ravi Jhunjhunwala, Chairman, Managing Director and CEO.

Over to you, sir.

Thank you, Rajesh. Good afternoon, everyone, and welcome to our financial results conference call for the fourth quarter and full year 2025-2026.

Let me begin this discussion with some broader industry context. According to World Steel Association, global crude steel production in Q1, January-March 2026, stood at around 459 million tonnes, marking a decline of roughly 2% year on year, while registering a sequential recovery of about 8% versus Q4 of last year.

This is mainly China-driven. We have seen this phenomenon of higher production in the last quarter of the year by China lot of times in the past, and this normally tapers down to more reasonable levels as we come to H2.

China typically follows a cyclical production pattern with output moderating in Q3 and 4 to align with environmental and policy targets, which is close to about a billion tonnes of steel production, followed by a strong restart in Q1, practically every year. Excluding China, global steel production stood at approximately 212 million tonnes in Q1 2026, which is a decline of about 1.3% over Q4 2025.

Among some key steel-producing regions, India continues to be a standout performer, recording around 5% quarter-on-quarter growth, supported by strong infrastructure and construction activities. The US too saw a modest growth, driven by steady industrial demand, while Europe remained relatively muted.

Japan, Brazil, and several other large steel-producing countries were broadly flat to slightly negative, reflecting ongoing softness. China continues to face domestic demand pressure, resulting in elevated export levels.

Chinese steel exports are now running at over about 100 million tonnes on an annual basis, which continues to impact global pricing and drive increased trade protection measures worldwide. At the same time, current geopolitical tensions amidst conflicts in the Middle East are contributing to volatility in energy markets and supply chains.

We are clearly witnessing an acceleration in the regionalization of steel trade, driven by rising protectionist measures globally in response to structural overcapacity, particularly in China. Measures such as Section 232 in US, anti-dumping, safeguard actions in Canada, Mexico, India, Brazil, and similar steps across other regions are reshaping trade flows.

In Europe, Carbon Border Adjustment Mechanism, generally called CBAM, is a key structural change. By imposing a carbon tax on imports of steel, it incentivizes lower-emission steel production or exports, which is only possible through electric arc furnaces.

In parallel, the EU's upcoming tariff-rate quota regime, coming as early as 1st of July 2026, is expected to further restrict steel imports into EU and thus increase its own steel production, which we have seen a decline constantly quarter after quarter. This is particularly significant for electric arc furnace steelmaking.

Excluding China, about 50% of steel is already produced through electric arc furnaces, and the share is expected to rise further, given its significantly lower carbon intensity compared to blast furnace/basic oxygen furnace routes. Under CBAM, reduced exports of steel to Europe are expected to increase favored electric arc furnace based steel due to its carbon footprint advantage.

As a result, we expect a structural and positive change in electric arc furnace steel production with a strong pipeline of new capacity additions of electric arc furnaces globally. This directly supports long-term demand growth of graphite electrodes.

To the best of our knowledge, about 20 million tonnes of new greenfield electric arc furnaces have already been commissioned in the last 12 to 18 months all over the world. We believe an additional 60 60 million tonnes are at different stages of implementation, which should be in production by 2028 and another about 30 million tonnes by 2030.

The total new installations of electric arc furnaces all over the world except China would thus be a little over 100 million tonnes. This kind of a growth in electric arc furnace based industry is unprecedented in the history of the steel industry and is expected to translate into incremental electrode demand of around 200,000 tonnes by 2030, excluding China.

We are very well placed to meet some of this new demand with our recent expansion from 80,000 to 100,000 tonnes. As you're aware, we've already announced our next expansion to 115,000 tonnes, which is likely to be operational by early 2028.

In this backdrop, our focus on operational efficiency, cost discipline, and customer diversification has enabled us to deliver a resilient performance during this quarter. We continue to operate at healthy utilization levels, which is probably the highest all over the world, averaging more than 90% for the whole year as well as the past three, four immediate quarters.

This is based on our expanded capacity of 100,000 tonnes, reflecting strong operational efficiency, low cost, and disciplined planning. Our plant near Bhopal remains the largest single-site location of electrode plants anywhere in the world with a capacity of 100,000 tonnes, which makes us one of the most competitive-cost companies due to its size and location in India.

Looking ahead, we remain confident of the long-term growth opportunity for our company. Construction of the additional 15,000 tonnes expansion is progressing as planned, and we continue to target completion by early 2028.

This will further strengthen our ability to serve incremental global demand at a competitive cost. To summarize, while near-term conditions remain mixed, the structural shift toward electric arc furnace steelmaking, supported by decarbonization policies and trade realignments in the world, continues to strengthen the long-term demand outlook for electrodes.

With our scale, cost leadership, and high utilization levels, we believe HEG is very well positioned to benefit from this transition. I would like to clarify a point on our investment in GrafTech.

I'd like to reaffirm that our position remains unchanged. This was undertaken as a deliberate long-term investment, and our conviction continues to be anchored in the structural fundamentals of this business rather than near-term market movements.

Cyclical volatility is intrinsic to this industry, and interim fluctuations in no way alter our outlook or our resolve. We remain fully committed to this investment, and we are confident in the long-term value it will create for our stakeholders.

We are pleased to inform that the composite scheme of arrangement is progressing well. The NCLT-convened meetings of the equity shareholders, secured creditors, and unsecured creditors of HEG are scheduled for Tuesday, 5th May to seek their approval of the same.

Subject to shareholders, creditor, and other regulatory approvals, we anticipate that the scheme could be approved by the NCLT sometime in the second quarter of this financial year. With that, I would now like to hand over to our CFO, Ravi Tripathi, to take you through the financial performance for the quarter, after which we will open the floor to the question and

Thank you, sir. Good afternoon, everyone.

Thank you for joining us. I will briefly explain our performance for the quarter end and for the full year ended 31st March 2026.

Compared to last year, we have shown strong growth in volume as well as in revenue. Our sales volume increased by 20%, which helped our revenue grow from ₹2,153 crore to ₹2,569 crore.

Total income also increased to ₹2,660 crore from ₹2,279 crore. Our EBITDA increased from ₹388 crore to ₹497 crore, with margins increasing from 17% to 19%.

Our operating margins remained stable in the range of 15% to 20% during the year, with more than 90% capacity utilization during the year. PBT has increased from ₹148 crore to ₹246 crore, which is a growth of 66%.

Net profit also increased from ₹101 crore to ₹181 crore. This improvement came from higher volumes, better control on input costs, and focused monitoring on all fixed costs.

The company remains financially strong, with no long-term debt as of 31st March 2026. It had a treasury of around ₹792 crore.

Coming to the quarterly performance, we reported a loss of ₹189 crore. This is mainly attributable to unrealized losses arising from fair valuation impact on foreign investments and rapid depreciation of rupee, which led to 5% within this quarter.

These are entirely unrealized losses, and we have taken impact of them in the books as per the applicable Indian Accounting Standards. Excluding the unrealized losses, our operating margins for the quarter is intact and is reasonably comparable with the previous quarters.

The Board of Directors had recommended a final dividend of ₹3.4 per equity share, face value of ₹2, subject to shareholder approval at the upcoming Annual General Meeting. For more details, the full presentation is available on the company's website and the stock exchange.

We are now happy to take your questions. Thank you.

Over to you, Rajesh ji.

Thank you very much.

Good afternoon. Thanks for the opportunity.

My first question is on pricing. During the quarter, GrafTech announced a price hike, and we are getting a sense that there is a growing customer acceptance around the price hike, given that the electrode cost is now less than 1% of the steel prices.

If we could quantify how much price hike we are looking to take, starting from this financial year, and then is there a similar cost increase for needle coke as well?

Manish, would you take this question?

Yes, sir. Amit, as we book orders, let's say, 3 to 6 months.

As we speak, we are about booked almost until September. For the unbooked orders, we're definitely looking at price increase.

Now it depends from region to region how much price we can get. Also, I would say that we already have some increase in cost due to these energy, freights.

The price increase is very necessary to be done. How much will be the quantum, whether it will be $300, $400, $500, is very difficult to say at this stage, how much every region steel companies are able to absorb and also what our competitors are doing at this stage.

Definitely, towards H2, our aim is to have price increase, not only to protect our margins, but to help improve further.

Okay. Does it implicitly mean that we are going to have some cost impact in the first half of the year even before the price hike rolls in?

It will be there, but not to that extent, because you see some of these energy prices and because of our longer product cycle. See, let's say, for example, if gas price are going today or furnace oil are going today, but when those products are made in 2 months and get shipped, there'll be a lag in that.

Yes, certainly there'll be some cost increase. Cost increase.

Yeah. Noted.

My second question is on Greentech, particularly for TASC. Where are we in terms of customer qualification process, and how fast can we ramp up once it gets commissioned?

Basically, my question is, are there any technology or qualification bottlenecks that are left to be resolved over the next 6 to 12 months?

Amit

ji, we have Ankur with us, our CEO. Ankur is there.

Ankur, you can answer this directly, then.

No, he doesn't seem to be there. You go ahead.

Okay. In terms of the customer acquisition, you are aware that we had set up a pilot plant for sampling, etc., more than 18 months back.

You'll be very happy to know that we made a very, very good progress with all the leading OEMs across the world, because Indian cell capacity is delayed, as it seems. We are actively working with all the Indian ones, as well as the companies like LG, Panasonic, ATL, etc., where we are in different stages of sampling.

Those sampling works are going extremely well, as well as the plant commissioning. There is no change in the plant commissioning date from April.

We hope that in the first year itself, we'll be able to have a decent 40% to 60% kind of capacity utilization because of the customer acquisitions that are going on right now. There are no issues on technology that we are facing currently.

Noted. Thank you so much.

Thank you.

Good afternoon again, sir. I wanted to know the sales volume for the quarter and why the revenue was lower.

Is it because of lower realizations or lower sales volume?

Yeah. Rajesh ji, about this Q4, there is a slightly less volume to the tune of, I guess, about 1,000 tonnes and some depression in price, but that is only because of our regional sales mix.

See, we are shipping to 40 countries, which lots, which customers, where they're going. There's no depression in price per se because in a market, it's just because of our size mix and order mix which goes quarter on quarter.

This quarter, we had some low-price orders going which dragged down our price a little bit. In April, May, June, you will see it quickly coming back up.

It's very temporary.

That did

cause some dent in the operating profits.

Just a related question. Is there any disruption because of the Middle East, and what proportion of sales are we selling there?

See, annually, we do about 20% sales in Middle East and MENA region, Middle East, North Africa. Yes, absolutely.

There's a disruption. The orders which we had from all these customers like Kuwait and Saudis all have to be postponed.

Instead, we had orders from other customers, they are being given precedence. They are going now.

As soon as the Strait of Hormuz opens and business normalizes, the pending orders which we are holding for Middle East, they will also quickly be shipped.

Sir, one more question from my side is that we've seen a huge rally in crude oil, so that will impact the needle coke prices. As you're covered till September you said on your contractual side, are you covered for the needle coke side as well?

How much are you covered for, and how much will that cost increase percolate to us from which half, and will the price increase happen simultaneously with that? Yeah.

You see, we are covered for needle coke shipments starting from their origins till end of June. By the time they arrive, they take 45 days to arrive, and our electrode processing is another 45 days.

It safely covers our costs until September from the needle coke side. However, it doesn't protect us from the other materials which we get from India, doesn't protect us from energy.

Purely on needle coke side, we remain protected until September.

Okay. Sir, one strategic question, one last question from my side, is that do you see the rise in gas and energy prices as an impediment to the electric arc furnace and the CBAM theme, because as I understand that the energy requirement in electric arc furnace is almost nearly three times more than that of a blast furnace?

Yeah.

You see, these energy prices actually depends in Europe, etc., how much power is a major cost for a electric arc furnace steel plant. That energy and the mix of power generation they have in Europe and US, I don't think it'll cause any direct hit to electric arc furnace steelmaking economics, because it depends on power at what price they can get the power in their country.

There may be some indirect connection, but see, there are gas-based power plants, but they're more in Middle East rather than in US or Europe. Maybe there's some marginal impact, but doesn't change anything, actually.

CBAM is on track. There is no derailment of that, right?

CBAM is applied already, actually. There they will see a reduction in steel imports in EU, which will encourage the local steel plants to run at a higher utilization and high demand of graphite electrode from Europe.

Okay. Thank you, sir.

I'll jump back in

the queue. Just to add that these European steel companies basically have no option.

As you all know, electric arc furnace emits about 20%, 30% of carbon as compared to the same steel produced through blast furnace. With the CBAM and X euro per tonne duties and everything that Europe is applying now from 1st of July, whether the cost is X or X plus something, they will have no option.

There is no way that they can pay that kind of CBAM duty and still be able to export their steel. They'll have to shift from blast furnaces to electric arc furnaces already.

Europe is already 50%, 55%. Europe is adding at least 25 to 30 million tonnes of new electric arc furnaces.

Some of them have already come in, some of them are under construction. By 2030, according to our information, and we believe this figure is more or less accurate because we are exporting 70% of our products to all parts of the world, our people are always on the road meeting this customer here and that customer there.

Close to 100 million tonnes of new electric arc furnaces are scheduled to come in, out of which 20, 22 are already in operation, and we believe about 30 million tonnes is going to be operational within 26, 27, and 28, and another 30, 35 million tonnes in 2028 and '30. That adds up to about 100 million tonnes.

That will require a lot of electrodes. Except our expansion, there's nobody who has even announced anything as yet.

It takes 2 to 3 years to even make a small brownfield expansion, as you know in our case.

Thank you.

Thank you for the opportunity. Just picking up from the questions you answered before my turn, for Q4, if you can quantify what was the sales volume?

You have quoted 94% capacity utilization. In terms of sales volume compared to last quarter, if you can quantify how many thousand tonnes have been impacted because of logistics or any other reason?

Did I say 1,000 tonnes? Almost.

Between Q3 and Q4, hardly 1,000 tonnes got impacted, because Middle East orders had to be postponed.

Okay.

But वो postpone बोलो या you diverted, you will divert it here and there. You're not Either divert it.

See, most of the postponements were diverted, and there's the impact of only $1,000 less in Q4 compared to Q3.

Got it.

Manish, as you were telling me, because the situation is so desperate, see, the steel companies in the Middle East are desperately placed as far as the raw material and everything is concerned. They don't want to close their plant.

They're prepared to pay $200, $300 extra for electrode to be sent by road instead of $20, $30 cost that we were incurring to take the electrodes to any Middle Eastern countries. I believe there is a way that you can take the electrode to some Middle Eastern port by ocean, then it takes as much as $200 to $300 to truck it down to the location of the plant.

They are prepared to pay for that. Obviously, $300 per tonne of electrode means nothing to them rather than closing the steel plant.

Correct. Sure, got it.

In terms of pricing, as you said, you are already booked till September. I'm assuming post-September contracts you will be probably doing now or maybe a few months down the line.

In that renewed committed volumes, do you see any significant price increase, or are you already into those conversation of increasing the price? If you can probably give some qualitative and quantitative commentary on the same?

See,

for all the new inquiries we are receiving, now we are pricing it accordingly. We're taking into account how much our costs have increased and some price increase was anyway necessary.

All inquiries don't come in one go. They keep coming every 2 days, 3 days, 1 week, 10 days.

Every customer has their own buying ways. We are offering increased prices in the market, and we are quite hopeful that some amount of the price increase should get absorbed, and steel industry should be willing to do that.

It also depends on what our peers group is doing, how much seriously they are pursuing the price increase. We will see.

We have started offering increased prices for the uncommitted volumes.

Sure. In terms of needle coke

Hi. Am I audible, sir?

You are. Kartikeya.

Yeah. Thank

you for the opportunity, sir. Sir, although I understand the whole investment rationale and the multi-year tailwinds that we have, but just some nuances that I wanted to understand from you.

Needle coke capacity supply is a constraint that we have in our industry. Now that capacity, the demand for that is from our industry as well as from the anode industry.

Now when we are saying that we are adding 120 kt of incremental demand, and again, there are reports of around 100 kt of addition of demand from anode sector. Now somewhere down the line, the whole math is not adding up to the existing needle coke capacity.

Then there are no recent capacity additions also happening in the needle coke industry. I just wanted to understand how are we going to fulfill the 120 kt of demand, given the fact that we are also not backward integrated like West players?

Some light on that from your side.

I'll I'll tell you a little bit. It is it is motivating me to tell you something which somebody asked and we we didn't answer that question very clearly.

The only reason that we decided to invest whatever we invested to buy GrafTech shares was primarily because that is the only graphite company in the world who is 75% to 80% backward integrated. I'm talking of GrafTech.

That's the only graphite company who has a graphite who has a needle coke plant of its own to the extent of about 75% of their own capacity. If you go back to 5 years ago, 6 years ago, when the electrode prices went up by 3, 4, 5 times, over a period of time, the same thing happened with needle coke.

The needle coke prices went up from about $1,000 to about $4,000 in a matter of 5, 6, 7 quarters. GrafTech was the only company which had about 80% of their captive requirement was is being met by their own coke plant.

While they made a lot of money like all the other graphite companies made because of price increase on electrodes, but they were in a unique position that they made an additional $2,000 to $3,000 for on the needle coke, while people like us or the Japanese or Graphite India or any anybody else except GrafTech had to pay had to had to buy needle coke at about $3,000 to $4,000 higher than what it used to be in a matter of less than a year. Our logic of buying these shares about 2 years ago, 1.5 year ago, was simply this: that if if and when we see the same time and the same days as we saw 5, 6 years ago, when electrode prices will go up and backed up by needle coke, while all of us all others except GrafTech will make a lot of money in electrodes, but this is the only company in in a unique situation that they will not only make money on electrodes, they'll also make a lot of money on needle coke.

This was a very simple logic for which we we invested. Of course, in the stock market, you can never be 100% right or you can never be 100% wrong.

At the price when we started buying, it was it looked like a steal. It did go up by 30%, 40%, and we decided not to sell.

It went down by 30%, 40%. It has recovered a lot in the last 2, 3 months.

Again, it's just a matter of time. As soon as we see some uptick and some of these 100 million tonnes of electric arc furnaces starting operations, which some of this has already started, as soon as we see that, we we see a shortage of electrodes.

We see If if there is a shortage of electrode, there'll be a shortage of needle coke for sure. That was a simple reason that we were looking at.

We we we went ahead and invested that money.

Fair enough, sir. Understood.

I get your point. Sir, but according to GrafTech, the 120 kt of extra demand that we are seeing, if I'm not wrong, they have mentioned that currently of around 650 kt, 1/3 has already been supplied by Chinese players.

Now this is not what I am saying. I guess this is what GrafTech is saying, and this is in the UHP market.

All the quality issues are there, but what do you read from this, because incrementally, can we get market share in this 120 kt, or Chinese players are also increasing its share quite deeply to supply?

What is this 120,000 tonnes supply that you're talking about?

No, sir. If you go through GrafTech's commentary in their annual report, they are mentioning that around 1/3 of existing 650 kt of demand that is there in the graphite electrode market currently is met by Chinese players.

That is bringing down the overall capacity utilization of the industry to 60% to 65%. Now my question is that what's stopping them from doing the same in the incremental 120 kt of capacity that's coming, that's required?

See, sir, can I answer this question? Huh,

go ahead. Huh.

Isme,

they have their own reasons and logic to say that 120,000 tonnes of UHP is being supplied from the Chinese, which is fine, you see. In China is exporting a lot of electrodes, and predominantly they are all high-power grade.

Yes, we will not deny that they do not export UHP electrodes. They do export UHP electrodes of almost the same order.

We believe it's probably 100,000 out of the 4,000 400,000 they export. In the low-power furnaces and sizes, let's say, mostly up to 24 inches, they're definitely doing that.

GrafTech, of course, in their concall, talks about China. They're talking about impact on them, they talk about China, they also talk about India, which is fine.

The capacity utilization they are running whatever is written there, 65 or something, in the last quarter. Please remember, HEG is running at 90% plus.

They have to explain for themselves, and we have to talk about ourselves. They have to explain to their stakeholders why they are at this, they are giving this reason, which is fine.

Which is totally fine. You are saying what is stopping them?

See, if you're talking about HEG, we are a very I would say a very cost-competitive plant because of our size and our location being in India. Structurally our costs are lower, when in our calls, we don't mention that, okay, because of Chinese so many UHP exports, we are being dented.

Right? Hmm.

Sir,

for the steel of West Bengal Sir,

Hi, sir. Thanks for the opportunity.

First question on again the quarterly numbers that's come out. You said there are unrealized losses in the investments and that's been the reason driving the loss.

If you could quantitatively tell us if we pull out the GrafTech loss and the loss on the forex instruments, is there a shipping cost hit also that is largely in the other expenses jump that has happened this quarter? Secondly, if you could tell me, from your contracts, when you have a fixed-price contract, say, 6 months ahead, is there a force majeure clause within it above a certain level of oil price or shipping prices per se?

No,

I'll answer the last question first. You see, particularly in Middle East, where freight costs shot up from $20, $30 to more than $300, of course, we had to tell our customers, and we did send letters of force majeure then wherever we are impacted.

See, some little bit cost increase, it is expected that supplier will bear. Anything out of the ordinary, of course, we have the right to go to our customers and tell them, and we did that for Middle East.

They're taking material FOB Mumbai and they're paying for the extra freight. The freights have also increased for US and Europe, but they are not yet of the order that we go back and breach our contract or request them, because it is still absorbable.

See, once you book a 6-month contract, there's some costs which will go up and down throughout the execution of the order. It can go up 5%.

That is expected. It sometimes gets lower, because for us, needle coke, pitches, electrical power, they are our major costs.

During a course of 6 months, when we commit to a certain price, unless something goes really wrong, we don't usually approach our customers and ask them for a price increase, because they can do it likewise. Suppose they keep track of our essential raw materials, and if the price goes down a shade, they don't come back to us to ask for a renegotiation of the contract.

We try to do as much visibility we have. If we have a 3-month 3 months our needle coke is tied up, and electrical power is tied up, then we take a safe call as to how much.

During the course of time, some increase, decrease does happen.

Right, sir. On the first question with the other expenses?

That Ravi Tripathi, our CFO, will answer.

Yes, in other expenses, if you see, if you compare with the previous quarter, you can see whatever the fair valuation losses we have added in the other expenses. That's why the other expenses is looking higher as compared to the previous quarter.

Right, sir. That's in your note.

Just apart from that, there is a still large jump that has not been disclosed in the note. If you could just quantify some of that for us?

Sir, some impact of the exchange gain loss during the quarter due to the rapid rupee depreciation. As I said in my initial opening remarks, that approx 5% rupee depreciated within quarter.

That impact is also there, so that's why the other expenses is higher as compared to the previous quarter.

All right, sir. Understood.

Thank you so much.

Hi. Thanks for the opportunity.

Sir, possible to quantify this FX loss which has been reflected in other expenses?

This is Raj, see this FX loss is completely a unrealized loss, and this

will

be in the range of ₹35 to ₹40 crore within the quarter.

Okay. Got it.

Given that rupee has depreciated further from the quarter end, we should expect something next quarter as well. By when will this reverse, because as you mentioned, this is unrealized?

Yes, in case the rupee suppose is appreciate, then definitely this will reverse. You can see some reversal in the next quarter.

Okay. Got it.

Any particular reason, let's say, even if on the gross margin side itself, if I were to look on a per-tonne basis, there has been some contraction Q-on-Q. Any particular reason for that, or it's

Rajkiran, I explained that. See, when this war happened, all these orders needed to be shuffled up and down.

There were some Middle East orders which didn't go, and some other orders which went. Quarter-on-quarter, there's always a slight movement up and down.

Because of this war thing, the Middle East orders had to be postponed till the situation normalizes and some other orders. It depends which orders are going in which particular quarter.

It's not a cause of concern, and you will see that coming up in April to June. We're very hopeful that by that time this issues will get resolved, because Middle East is next door and we'll start pushing material as soon as the situation is clear.

Got it. Mix turned adverse in the sense that Middle East I presume is a better margin geography, mix change results a bit off.

Obviously. Logistic costs are much lower for Middle East.

Hmm. Okay.

No, but the prices can be different. We can't talk about which area

is better. Sure.

Just in terms of your opex, how much of it is rupee-denominated and how much is FX-denominated? I'm just trying to presume because of the sharp depreciation in rupee, maybe over time, how much of realization benefit can come to EBITDA?

No, we gain by rupee depreciation, for sure. Our foreign exchange outgo is only on account of needle coke, which is

a

smaller part compared to the total realization. Obviously, we're a net exporter, we gain more by rupee depreciation.

Right. Just trying to understand X of RM, how much of our cost is dollar-denominated, which will also then go up along with depreciation, and then I'm just trying to understand net-net how much benefit do we retain of the rupee depreciation?

Over time, maybe in near term

We don't want to talk about specific numbers.

Sure. Perfect.

Thanks.

Hi. Am I audible?

You are.

Okay. Thanks for the chance.

I wanted to understand that given that needle coke is also being used in batteries and this is again premium or super-premium, battery-grade material, I want to understand a little bit more about the raw material sourcing and availability and capacities globally. One is, could you talk about where do you procure your needle coke from?

What is that manufacturer's capacity? Are they adding capacity globally?

Is needle coke capacity additions taking place? Only to understand broadly that if the demand for needle coke gets repivoted more towards the battery side, what kind of scarcity that could do for decarbonization in EAF?

That's broadly what I'm trying to understand. Thanks.

I'll take this question. See, about 4, 5 years ago, when the electrode suddenly went into a serious shortage and the prices went up by 3, 4 times, and so did the needle coke, obviously.

At that time, obviously, we talked to all our 3, 4 suppliers of needle coke. Firstly, needle coke is also a very technology-based product, and I don't think there has been any new greenfield needle coke plant put anywhere in the world in the last 70, 80 years.

There has not been any new entrant in this last 70, 80 years. There are only 3, 4 suppliers in the world from Japan and US.

What we realized at that time 5 years ago when the needle coke prices went up by 3, 4 times, did the electrode price. At that time, we realized that the price that we can pay for needle coke, the battery guys cannot pay, because I believe in the battery, needle coke is one of the maybe 7, 8, 9 things which goes as part of their raw material.

Needle coke can be replaced by one of these, say, 6, 7 other raw materials that you can mix. For graphite electrode, there is nothing that you can do.

You have to only use this particular needle coke which is produced by these 3, 4 companies. At that time also, while we could pay whatever sharp increase happened in the needle coke price, the battery guys could not pay that kind of a price.

They had an option to replace needle coke by something else. That something else probably is 3, 4, 5, 6 different raw materials.

If they were using, let's say, 10, 12, 15% of needle coke, they replaced this 10, 15% of needle coke by other 4, 5 products that they were mixing in any case. Needle coke capacities have not gone up.

Just like graphite electrodes, if you see the last 40, 50 years of graphite industry in the world, except HEG, there has not been any new expansion anywhere else in the world, whether it India or in Europe or America or Japan. On the contrary, the capacities have shrunk in the last 4, 5 years.

To that extent, there was no need for the needle coke guys also to expand. They could not sell whatever they were producing for the last 5, 7 years.

Sorry, sir, if I understand the last bit correctly, you said that the needle coke suppliers were not able to sell their desired quantity for the last 4, 5 years?

That's right, because they were underutilized for a while. It's not that battery and electrodes are using exactly the same kind of product.

There's anode-grade coke which all these companies also make. The needle coke per se, there's lakhs and lakhs of tonnes of demand for the battery coke.

Had it been true, then needle coke suppliers would be running more than full. We have seen when the capacity utilization of electrode industry was down in the last 1 or 2 years, they had extra capacity, there was abundant supply of needle coke, which clearly shows that it was not exactly going to the battery application.

Thank you, sir, for this opportunity. Just one follow-up question again on the needle coke.

You mentioned that we haven't seen any material increase in graphite electrode

Amit? Yes, please.

Are you there? Disconnected.

Are we disconnected, or what happened?

Yes, sir, I am there, sir. Amit was asking some question when he disappeared.

Either he is disconnected, or you and us are disconnected.

No, I am also there, I am also connected.

Okay.

Maybe we lost Amit.

Rajesh, are you there? Rajesh?

Hello.

Go ahead, please.

Hello.

Go ahead.

Since GrafTech has taken price hike, do we expect this price hike to get fully priced in for uncommitted volumes?

Am I audible right now?

Hello.

Yeah. If GrafTech has taken a price hike of around $600 to $1,200, by the end of this current financial year for FY '28 volumes, can we expect a full price hike to be seen in our volumes also?

See, everybody's talking about uncommitted volumes, sorry. I hope by GrafTech or we announcing that we are taking a rise of $600, $1,200, I wish the market behaved.

The market accepts whatever we are talking about. It's one thing to say that I want to do this, and there's always the other sides who negotiates with you.

In this business, as you know very well, it's a very long process-driven industry. The minimum time taken to produce electrode is about 2, 2.5 months, and the longest time takes as much as 4 to 5 months.

Obviously, in this kind of a business, we have to take orders at least for the next 3 to 6 months. Otherwise, we can't even meet the delivery schedules.

Then if you are exporting 70% to more than 30 countries, it takes time for the products to reach America. America will takes 40, 45 days to reach.

We are committed on a certain price for a certain period of time. Similarly, we are also committed to buy needle coke for a certain period of time at a fixed price.

There

is a time lag between when you announce that you are taking a price increase and the time that you start getting it.

Sure. That's it from my side.

Thanks.

Thank you for the opportunity. The commentary by is very helpful to understand the industry as a whole.

On needle coke specifically, we mentioned that we have supplies till June, which will last us till September given how the manufacturing works. Is there any indication as to with the Middle Eastern crisis going on, how much of an increase we are seeing in needle coke prices right now?

Because I'm guessing some amount of negotiation would have begun for the next shipment, right?

Far, there is no indication. We've not heard from them.

Maybe in the month of June or maybe by 15th June or something when we actually sit down and discuss the next quarter's contracts, I don't know what they will come up with.

Understood. With the crude price increase and I believe the needle coke raw material is a derivative, there should be a price increase.

Is that correct?

Right, it eventually comes from oil. It comes from decant oil.

When oil goes up, of course, they are impacted. We'll see how the oil prices are behaving.

They might come down, they might stay where they are. Probably the right time when we'll come to actually know of it will be sometime in the middle of June.

Thank you. The second question is, in the opening commentary, Chairman, sir, spoke about the regionalization of trade even in our industry, right?

There is a lot of protective measures, including the CBAM measures in Europe against steel imports, and then there is talk of countervailing and anti-dumping duties in US against Indian and Chinese imports, which apparently they expect to see an outcome by September. In this increasing regionalization that's happening, how do you see our volumes over the next 2, 3 years?

Do you think it would affect our volume that we can export, or it won't impact as much because of our cost-competitiveness?

It all depends upon how the whole thing goes. Obviously, we have taken a very strong law firm from India, and we have taken a very strong law firm in US.

They've taken all the datas and everything from us. We'll know in the next 4, 5 months as to what happens.

We don't think that we're doing something seriously wrong, at least in America, where our pricing is amongst the highest. It's a matter of legalities.

We'll see what happens. The whole world is becoming very protective, as we have seen in the last 10, 15 years.

All I can say is that we are the lowest cost producer. To some extent, if these duties or taxes, whatever you want to call, that's at a reasonable level, we can probably absorb it.

Understood. That was helpful, sir.

The primary driver of price increase for us in the graphite electrode industry would be driven by the cost increases related to what's happening in Middle East, right? There is no other reason why there's a price increase, or is there something else driving the price increase?

No,

their costs are much higher than ours. It's not just the Middle East problem.

Even before the Middle East problem, if you go through the quarterly results of all the meaning there are only 2, 3 international companies. They have been losing money pretty big time even before the war.

My confusion is more around why now, right? This what you've been saying has been going on for 3, 4 years probably.

Around this time is the crisis more a coincidence, or is it that match that the market needed to increase prices? Why this year, and will it continue over the next year?

Or is it too difficult to answer these questions given the volatility?

What exactly was your question when you said why now?

No, what you said about the supply has been shutting down in the industry over the last 3, 4 years. The losses in GrafTech and the Japanese players has been going on for 2, 3, 4 years.

We are seeing finally price increasing process. This is potentially happening now in the graphite electrode space.

What is driving the price increases to happen this year, and will it continue over the next year, or is it too difficult to answer this question?

Sir, graphite electrode industry was looking for a price rise not from now, for the last almost 2 years, because this is unsustainable for them. For our peer group, incurring losses quarter by quarter was unsustainable.

Everybody was hoping for things to turn around and price rises to happen. If you say why now, probably is the last straw on the camel's back, that now with this additional Middle East war, it's not totally unsustainable for them.

I think now this was the right time. If not now, then when?

It's like that. As you said, why about the timing, then I should say that all of us, including HEG, were looking for a price increase to happen for last quite a few quarters, and it didn't happen.

Over and above, now there's a Middle East situation, rise in energy, rise in freight. This is the last straw on the camel's back.

Understood. Thank you for your answers.

It has been very helpful. Thank you so much.

Hi. Good afternoon, sir.

My first question is on the utilization of graphite electrode. How much exactly it has been for the fourth quarter?

Because, as you say, the volume is only affected by 1,000 tonnes, but it does not reconcile with the 53 numbers. Because in Q3, we had said that 85% utilization is there.

On my numbers, it is coming at around 2,500 tonnes for the quarter difference. Can you please explain there?

See,

the capacity utilization, when you say, we're talking about production, how much we produce, and then there's sales wise. If you strictly talk about capacity utilization on production, actually it's 95% for the quarter.

Sales wise, it is less than that. Overall for the year, it is more than 90%.

Okay. On production wise, 2,500 tonnes of number, the difference what I'm getting is correct.

On the sales volume, we are down 1,000 tonnes.

Down 1,000 tonnes, absolutely. Bilkul theek.

Okay. Sure.

The second question is that why other income has gone down during the quarter? Does it only constitute the interest income, or any other part of income is also included in this?

How should we see it going ahead for this on quarter-on-quarter basis?

The other other income in the quarter is, yeah, income in the quarter is lower due to the loss in the the fair valuation loss which we have classified in the other expenses. That's why the income is is is coming in the quarter is lower side as compared to the previous quarter.

Going forward, it will be in the in in the same line as we have we are in the previous quarter.

Okay. Lastly, sir, from my end, last quarter in Q3, we had guided for the sustenance of EBITDA margin of around 22% for the next couple of quarters.

Since fairly in Q4 because of all these Middle East crisis, we could not sustain that kind of margin. How should we see it now going ahead for the quarters and for FY '27, '28 if you could shed some light on that?

According to me, in the first two quarters, April to June, July to September, see, all along these quarters, we have been, as Ravi Tripathi said, we have been between 15 to 20, and we have closed this year also at 20. Now these two quarters where we have committed volumes should be maybe around 17, 18 or something.

I can't hazard a guess. It depends upon what happens in the balance of the quarter.

Should be around that number. Tripathi ji, you want to correct me, please go ahead.

Sir, these are correct, sir. The EBITDA range will be the 20% we can say for the next first quarter and second quarters.

For this full year, it will be more than 20? Is it good to say that?

Yes,

plus

20%.

Should be.

Yes. Should be.

Hona hi chahiye.

Should be.

Okay. That's it from me.

Thanks.

I guess if there is no further question, let me thank all of you for taking so much of interest and asking us some very very very probing queries. This forces us to think about answering all these things, a couple of things maybe we would not think about otherwise.

Thank you very much, and I hope you continue to ask us these uncomfortable questions and we are able to satisfy you. Thank you very much, and I look forward to meeting you again in 3 months' time.

Thanks.