HEG Ltd

HEG’s Graphite Electrode capacity currently stands at 80,000 MT, making it one of the largest single-site integrated graphite electrode facility in the world.  It also operates three power generation facilities with a total rated capacity of about 77 MW. The hydroelectric power plant at Tawa near Itarsi, District Hoshangabad (Madhya Pradesh) has a rated capacity of 13.5 MW, while two captive thermal power plants located at Mandideep (Madhya Pradesh) have rated capacities of 30 MW and 33 MW respectively. Net sales of the company for Q4FY13 was at Rs.443 crore, up 9% (YoY) but net profit at Rs.35 crore soared 7 times. This was higher mainly on account of lower base effect. In Q4FY12, the company had a higher forex loss at Rs.48 crore and that automatically subdued the net profit thus the net profit of Q4FY13 looks so healthy. In fact in Q4FY13, the company had a forex gain of Rs.2.5 crore.  The performance of the power sector was good with revenue for Q4FY13 coming in 23% higher (YoY) and EBIT was up 111%.

For FY13, consolidated total revenue was up 14% at Rs.1623 crore and net profit rose 75% at Rs.100 crore.  Forex loss was lower for the year at Rs.55 crore v/s Rs.93 crore in FY12. Finance cost was higher for the year at Rs.64 crore compared to Rs.41 crore in FY12. Capacity utilization for the year was at 75%. The company had pressure on volumes which came in lower, meaning the company sold less and this was due to weaker demand from its main customer sector – steel.  Pressure on volumes is expected to remain in the short term and in current fiscal, the company hopes to maintain EBIDTA margin at 16-20%. Consolidated debt of the company at end of FY13 stands at Rs.1215 crore.  Looking ahead in the immediate short term,  the downward bias in prices of graphite electrodes is expected to continue but lower price of needle coke, its main raw material is also expected to remain low and if supported with better volumes, only then will margins improve.