HEG/SECTT/2023

21st August, 2023

BSE Limited

National Stock Exchange of India Limited

25th Floor, P J Towers

Exchange Plaza, 5th Floor

Dalal Street

Plot No.C/1, G Block, Bandra - Kurla Complex

MUMBAI - 400 001.

Bandra (E), MUMBAI - 400 051.

Scrip Code : 509631

Scrip Code : HEG

Sub: Transcript of Earnings Conference Call on Q1 FY24 of HEG Limited

Dear Sir/Madam,

Please refer to our Earnings Conference Call scheduled on 18th August, 2023 intimated vide our letter dated 14th August, 2023. Please find enclosed the transcript of the said Earnings Conference Call.

The said transcript is also available under the Investors Section of the website of the Company i.e www.hegltd.com.

This is for your kind information and records.

Thanking You,

Yours faithfully,

For HEG Limited

VIVEK CHAUDHARY

Digitally signed by VIVEK CHAUDHARY

Date: 2023.08.21 18:46:26 +05'30'

(Vivek Chaudhary)

Company Secretary M.No. A-13263 heg.investor@lnjbhilwara.com

Encl: as above

"HEG Limited

Q1 FY2024 Earnings Conference Call"

August 18, 2023

ANALYST: MR. NAVIN AGRAWAL - HEAD INSTITUTIONAL

SECURITIES - SKP SECURITIES LIMITED

MANAGEMENT: MR. RAVI JHUNJHUNWALA - CHAIRMAN, MANAGING

DIRECTOR & CHIEF EXECUTIVE OFFICER - HEG

LIMITED

MR. RIJU JHUNJHUNWALA - VICE CHAIRMAN - HEG

LIMITED

MR. MANISH GULATI - EXECUTIVE DIRECTOR - HEG

LIMITED

MR. OM PRAKASH AJMERA - GROUP CHIEF FINANCIAL

OFFICER - HEG LIMITED

MR. GULSHAN KUMAR SAKHUJA - CHIEF FINANCIAL

OFFICER - HEG LIMITED

Page 1 of 12

HEG Limited

August 18, 2023

Moderator:Good day ladies and gentlemen. Welcome to the HEG Limited's Q1 FY2024 Earnings Conference Call organized by SKP Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal an operator by pressing '*' and then '0' on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agrawal, Head Institutional Equities at SKP Securities Limited. Thank you and over to you Sir!

Navin Agrawal:Good afternoon ladies and gentlemen. It is my pleasure to welcome you on behalf of HEG Limited and SKP Securities to this financial results conference call with the leadership team at HEG Limited. We have with us Mr. Ravi Jhunjhunwala - Chairman, Managing Director and CEO and Mr. Riju Jhunjhunwala - Vice Chairman along with their colleagues Mr. Manish Gulati - Executive Director, Mr. Om Prakash Ajmera Group CFO and Mr. Gulshan Kumar Sakhuja CFO. We will have the opening remarks from Mr. Jhunjhunwala followed by Q&A session. Thank you and over to you RaviJi!

Ravi Jhunjhunwala: Thank you Navin. Friends good afternoon and welcome to our financial results conference calls for Q1 FY2023-2024. As per World Steel Association's data steel production in the first six months of the calendar year 2023 that was January-June was lowered by about 4% at 408 million tonnes as against 425 million tonnes in the first half of 2022 and it is expected to remain subdued in the rest of the next six months as well. However, World Steel Association's outlook projects that steel demand would rebound in the next few quarters and is likely to increase by about 4% in 2024. It has been known for quite some time that steel industry alone accounts for about 7% of the global carbon emissions in the world and it also accounts for about 23% of industrial carbon emissions. The western world especially the US and the Western Europe are making serious efforts to decarbonize the steel industry in the near future. Steel produced through blast furnace emits about four times more carbon from the same steel produced through electric arc furnace. In this backdrop, the western world's steel production through electric arc furnace minus China it used to be about 44% in 2015 has now already reached about 50% in 2022 going up by about 78 million tonnes from 357 million in 2015 to 435 million tonnes in 2022. Several steel bodies in the world expect electric arc furnace production minus China to further increase by about 100 million tonnes by 2030 taking the electric arc furnace production from its current level of 435 million tonnes to 535 million tonnes which means an additional demand of graphite electrode to the extent of anywhere in the region of 160 to 190000 tonnes. Similarly OECD to expect new capacities of US minus China of about 53 million tonnes to be operational by 2026 and another about 45 million tonnes by conversions of blast furnaces into electric arc

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HEG Limited

August 18, 2023

furnaces by 2030. So, this again matches with the WSA figure of about 100 million tonnes of new electric arc furnaces coming into operation in the next 6-7 years. This would mean a substantial increase in demand of our products all over the world and since we have been exporting about two thirds of our production to some 30 plus countries for a very long time, we are well set to meet this demand from HEG. We are closely tracking about 60 million tonnes of new electric arc furnace capacities between Europe and US of which about 7 million tonnes have already started and another 18 million tonnes are likely to be in operation in the next two years and the rest between 2026 and 2029-2030. In this backdrop our timely decision to expand our capacity by about 20000 tonnes per annum is likely to yield good results. While we remain solidly upbeat about the continued growth of electric arc furnace steel production in the coming decade resulting into a continuous rise in electrode demand at present we are seeing a period of subdued steel production in the world over due to several global factors, which all of us are aware, which is likely to continue through the end of 2023 resulting into subdued demand for our products for the next few quarters.

Now turning to China, China which only produces about 5% of its steel through electric arc furnace say about five years ago is currently at the level of 12% and is aiming to reach 20% by 2025. We believe electric arc furnace will grow at a CAGR of about 3 to 3.5% in the next decade, which will directly translate into a substantial increase in graphite electrode demand. All this sounds very exciting for us at HEG as no new capacities in the electrode industry have been announced by any other graphite company in the western world.

Now a word about our expansion, production of graphite electrodes as you know is a long process which entails five different processes. Four of these are already in operations for the last few months and the last one is under trial and is likely to go on stream fairly soon. In our expansion we have used some of the best and most modern equipments and technologies which we believe will take us to the next level of enhanced capabilities in terms of quality as well as cost competitiveness. We at HEG had been operating the world's largest plant under one roof with a capacity of 80000 tonnes for a long time and with our expansion to 100000 tonnes very soon going to be operational we are in a strong position to take advantage of the growth in demand of our products.

Now a couple of words about our new subsidiary TACC. Our new project of graphite anode is progressing well and we have started our pilot plant which will facilitate trials. The land acquisition for this project is already achieved and we expect to complete the first phase of the project to make about 10000 tones of anode by mid 2025.

Page 3 of 12

HEG Limited

August 18, 2023

Friends in conclusion our Q1 2023-2024 has been pretty satisfactory given the very tough market conditions. The next two, three quarters may see margins coming under some pressure, but we are fully confident of the demands coming back from 2024 onwards and we will take full advantage of our expanded capacity and competitive costs. We have all the technological capabilities, operational efficiencies, and market reach to take our company forward and to succeed and thrive in all emerging situations to create long-term value for our shareholders. With these words I will now pass the floor to our CFO, Gulshan who will take us through the financial figures following that Riju, our Vice Chairman; Manish, our Executive Director and Gulshan will all be very delighted to address any queries you may have regarding electrodes and graphite anodes. Thanks and over to Gulshan!

Gulshan Sakhuja: Thank you Sir! Good afternoon friends. I will now briefly take you through the company's operating and financial performance for the quarter ended June 30, 2023. For the quarter ended June 30, 2023 HEG recorded revenue from operations of Rs.671 Crores as against 722 Crores in a corresponding quarter of the previous financial year. During the quarter ended June 30, 2023 the company delivered EBITDA of Rs.178 Crores as against 205 Crores in the corresponding quarter of the previous year. The company on a standalone basis recorded a net profit after tax of Rs.98 Crores in Q1 FY2024 as against 134 Crores in the corresponding quarter of the previous year and on a consolidated basis the net profit after tax is Rs.139 Crores in Q1 FY2024 as against 159 Crores in the corresponding quarter of the previous FY. The company is long term debt free and had a treasury size of nearly 980 Crores as on June 30, 2023. Now to take out more questions from the participants the detailed presentation has been uploaded on the company's website and on the stock exchange. Now we would like to address any questions or queries you have in your mind. Thank you. Over to Navin!

Moderator:Thank you very much Sir. We will now begin the question and answer session. The first question is from the line of Amol Rao from Kitara Capital. Please go ahead.

Amol Rao:Good afternoon Sir. Sir just a clarification I thought you were expecting to commission our capacity at the end of June a slight delay understandable but what is the technicality to which the delay is happening?

Ravi Jhunjhunwala: See as I said out of five operations four have been in operation so we are getting the additional tonnages from those four but obviously if the fifth one is not yet commissioned to that extent I cannot say that we can produce 100000 tonnes as of today but it has been a very small breakdown of a very small piece which is being replaced and it is coming from Bengaluru and it is a matter of another maximum three to four weeks and by end of next month we should be in business.

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HEG Ltd. published this content on 21 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 August 2023 13:34:08 UTC.