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HEG Ltd. Investor Presentation 2021

Feb 14, 2021

61624_rns_2021-02-14_3bc97858-1d0b-46a6-812d-e453f77ebc53.pdf

Investor Presentation

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PROUD TO BE INDIAN PRIVILEGED TO BE GLOBAL

14[th ] February, 2021

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HEG /SECTI / 2021

1
BSE Limited
25th Floor, P J Towers
Dalal Street
MUMBAI-400 001.
Scrip Code : 509631		 2
National Stock Exchange of India Limited
Exchange Plaza, 5th Floor
Plot No.C/1, G Block, Bandra - Kurla Complex
Bandra (E),
MUMBAI-400 051.
Scrip Code : HEG

Sub: Investors presentation on the unaudited Financial Results of the Company for the quarter & nine months period ended 31[st ] December, 2020.

Dear Sirs,

Please find enclosed a copy of Investors Presentation on the unaudited Financial Results of the Company for the quarter & nine months period ended 31[st ] December, 2020 for your information and record please.

The copy of same is also being uploaded on the website of the Company.

Thanking you,

Yours faithfully, For HEG Limited

retary heg. [email protected]

Encl: as above

HEG LIMITED

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Corporate Office Regd. Office Bhilwara Towers, A-12, Sector-1 Mandideep (Near Bhopal) Dist!. Reisen - 462046 Naida - 201 301 (NCR-Delhi), India (Madhya Pradesh), India Tel.: +91-120-4390300 (EPABX) Tel.: +91-7480-405500, 233524 to 233527 Fax: +91-120-4277841 Fax:+91-7480-233522 Website: w .lnjbhilwara.com Website: www.hegltd.com Corporate Identification No.: L23109MP1972PLC008290

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HEG LIMITED Investor Presentation

Performance Highlights Q3 of FY 2020-21

HEG is part of LNJ Bhilwara group a diversified, reputed and large Indian business house having more than five decades of industrial experience and presence in

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THE FAMILY TREE

IT Enabled Services

Buds flower in our service sector offerings.

  • Bhilwara Infotech Ltd. – IT Software

  • Bhilwara Scribe Pvt. Ltd. – Medical transcription

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Textiles

The roots of our Group heritage

  • RSWM Ltd.

  • Maral Overseas Ltd.

  • BSL Ltd.

  • BMD Pvt. Ltd.

  • Bhilwara Technical Textiles Ltd.

Power Generation & Power Consultancy

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•
•
•
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The branches spread forth, powered by

  • Bhilwara Energy Ltd.

  • Malana Power Company Ltd.

  • AD Hydro Power Ltd.

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Graphite Electrodes

Standing tall, the shaft supports the branches

  • HEG Limited

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2

HEG Ltd © LNJ Bhilwara Group

HEG Limited – Profile

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  • HEG Limited is a leading graphite electrode manufacturer & exporter globally.

  • Exports approximately 70% of its production to about 30 countries around the world.

  • Diversified customers - supplying large portion of production to top 20 steel companies of the world.

  • Graphite electrodes manufacturing plant (capacity of 80,000 tons /Year) located at Mandideep in MP, India - is the largest single-site facility in the world. Further expanding to 100,000 tons in 2 years.

  • Captive power generation capacity of around 76.5 mw (2 thermal power plants & 1 hydro power plant)

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World’s Largest Single Site Graphite Electrode Plant
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HEG Ltd © LNJ Bhilwara Group
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3

Business Overview

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  • HEG is among the world’s top five graphite electrode manufacturers

  • Steel production levels started improving in rest of the world excluding China since Oct’20 and prices started moving up resulting in increased profitability of steel companies.

  • The excess inventories of graphite electrodes have been liquidated and now steel companies are working at normal inventory levels.

  • The increase in steel production and normalisation of electrode inventory levels have resulted in increase of electrodes demand thus increasing our capacity utilisation levels.

Graphite Electrode Capacity (KMT/Year)

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230
210
98 96
80
32 27
GrafTech Showa GIL Tokai HEG NCK SEC
Denk0 Carbon
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  • We expect electrode prices to start firming up from next quarter.

HEG Sales share among Exports & Domestic Market

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Export (%) Domestic (%)
80% 75% 75%
80%
68%
73% 70%
62%
38% 32% 25% 25% 27% 30%
20% 20%
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 (P)
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HEG Ltd © LNJ Bhilwara Group

4

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  • 1977 - Established in Financial (appx 25% equity) / Technical participation of Pechiney, France

  • 1992 - Pechiney sold their Graphite business to SGL, Germany & Indian Promoters bought these shares in HEG

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  • 1995 / 2011 – Kept expanding from 10,000 mt in small tranches & in 2011 took a quantum leap from 60,000 to 80,000 mt

  • Single largest Graphite plant in the world under one roof.

  • Consistently exporting appx 65-70% of production to more than 30 countries and to more than 100 customers around the world incl ArcelorMittal, Nucor, Posco, Tata, Sail, Jindals, Sabic, Gerdau, Ferroatlantica, Celsa etc.

  • Capacity Expansion to 100,000 mt in next 24 months.

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R&D Center

  • R&D set up to corroborate the Quality & Improvement Drives with small scale production facilities

  • The focus is also on development of new product lines

  • Development is focused towards Carbon

CRUDE STEEL PRODUCTION ANNUAL GROWTH TREND (%)

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12.4
China Rest of world World
7.8 7.9
6.6
5.8 6.3
5.2
5.2
4.1
4.9 3.0
2.6
3.8
1.5
0.6
1.3
0.5
0.5
0
0.0
-0.1
-2.2
-0.8
-0.9
-2.1
-3.1
-3.8
-7.7
Source :WSA
2012 2013 2014 2015 2016 2017 2018 2019 2020
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HEG Ltd © LNJ Bhilwara Group

7

World Crude Steel Production Last Eight Quarters ( CY Jan 19 – Dec.20)

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China World Excl. China
281
271
269
261
257
246
232 230 234
218 218
205
224
216 217 219
206 207 210 189 208
204
201
+25%
+41 mmt
167
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Jan 19 to Dec 19 CY’15 Avg. CY’16 Avg. CY’17 Avg. CY’18 Avg. Jan-Mar Jan 19 to Dec 19 Quaterly Quaterly Quaterly Quaterly

Jul-Sep

Oct-Dec Jan-Mar. Apr-Jun. Jul-Sep. Oct-Dec.

Apr-Jun

Jan 20 to Jun 20

Jan 19 to Dec 19

Jan 20 to Dec 20

HEG Ltd © LNJ Bhilwara Group

8

TOP 10 EAF STEEL-PRODUCING COUNTRIES-2020

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Rank
Country		 EAF Steel Prod.
CY-2020(Mt)
EAF Steel Prod.
CY-2019(Mt)
Change Absolute
%2020/2019		 EAF Steel Prod.
CY-2020(Mt)
EAF Steel Prod.
CY-2019(Mt)
Change Absolute
%2020/2019
1
China		 109.5
104.1
5.38
5.2%
2
United States		 50.7
61.2
-10.50
-17.2%
3
Iran		 26.2
23.2
3.09
13.4%
4
India		 25.9
29.0
-3.06
-10.6%
5
Russia		 24.7
24.1
0.56
2.3%
6
Turkey		 24.2
22.9
1.37
6.0%
7
South Korea		 21.3
22.7
-1.36
-6.0%
8
Japan		 20.4
24.3
-3.94
-16.2%
9
Italy		 16.5
19.0
-2.45
-12.9%
10
Mexico		 13.0
14.2
-1.18
-8.3%
Subtotal 332.5
344.6
-12.10
-3.5%
World ex China
Source :WSA		 386.8
419.2
-32.34
-7.7%
World 473.5
477.5
-4.06
-0.9%

HEG Ltd © LNJ Bhilwara Group

9

China's Finished steel exports

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  • China exported a gross 53.69 million mt of semi-finished and finished steel in 2020, down 17% year on year

  • Recovering demand for China's exports and a likely slowdown in domestic home starts in 2021, the net steel exports are likely to rebound in 2021.

  • China's steel exports may climb up in first quarter of 2021, as overseas demand has improved substantially and the domestic market will be traditionally weak amid the Lunar New Year holidays.

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52%
(58 mmt)
112
108
93
75
69
64
54
CY-14 CY-15 CY-16 CY-17 CY-18 CY-19 CY-20
HEG Ltd © LNJ Bhilwara Group 10
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10
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Financial Snapshot (Standalone)

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in Rs. Crore (except EPS) in Rs. Crore (except EPS)
PARTICULARS Q3 FY’21 Q2 FY’21 Q1 FY’21 FY 19-20 FY 18-19 FY 17-18
REVENUE FROM OPERATIONS 320 323 233 2,149 6,593 2,758
EBITDA* 24 (25) 35 138 4,767 1,734
EBIT 6 (44) 17 66 4,695 1,661
PAT 5 (34) 11 53 3,050 1,081
EPS 1.21 (8.79) 2.79 13.83 763.60 270.61
EBITDA Margin (%) 8% (8%) 15% 6% 72% 63%
EBIT Margin (%) 2% (14%) 7% 3% 71% 60%
PAT Margin (%) 1% (11%) 5% 2% 46% 39%
  • EBITDA includes Other Income

HEG Ltd © LNJ Bhilwara Group

11

Profit & Loss for the Quarter ended 31[st] December 2020- Standalone

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in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores
Sl. No. Particulars Quarter Ended Nine Months Ended Year ended
31‐12‐2020 **30‐09‐2020 ** 31‐12‐2019 31‐12‐2020 31‐12‐2019 31‐03‐2020
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
I
II
III
IV
V
VI
VII		 Revenue from Operations 319.59 322.88 393.69 875.75 1,774.59 2,149.02
Other Income 25.35 16.41 27.28 87.80 101.46 143.76
Total Revenue(I+II) 344.94 339.29 420.97 963.55 1,876.05 2,292.78
Expenses
Cost of materials consumed
Purchase of stock ‐in‐trade
Changes in inventories of finished goods, work‐in‐ progress and stock‐in‐trade
Employee benefits expense
Finance cost
Depreciation and amortisation expense
Power and Fuel (Net of Interdivisional Purchases)
Other Expenses
Total expenses(IV)		 142.65
‐
61.75
13.47
1.27
18.53
31.75
71.24
340.66		 158.29
‐
93.12
12.51
3.04
18.34
30.19
70.64
386.13		 261.01
‐
7.28
17.48
8.73
17.79
39.90
63.28
415.47		 387.47
‐
220.99
39.75
10.28
54.64
89.85
192.17
995.15		 1,089.52
‐
(231.87)
69.35
27.93
53.26
128.75
227.23
1,364.17		 1,558.13
‐
62.95
65.60
36.51
72.13
163.31
304.86
2,263.49
Profit/(Loss) before exceptional items and tax (III‐IV) 4.28 (46.84) 5.50 (31.60) 511.88 29.29
Exceptional Items ‐ ‐ ‐ ‐ ‐ ‐
Profit/(Loss) before Tax(V‐VI) 4.28 (46.84) 5.50 (31.60) 511.88 29.29

HEG Ltd © LNJ Bhilwara Group

12

Profit & Loss for the Quarter ended 31[st] December 2020- Standalone

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in Rs. Crores

Sl. No. Particulars Quarter Ended Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended Year ended
31‐12‐2020 **30‐09‐2020 ** 31‐12‐2019 31‐12‐2020 31‐12‐2019 31‐03‐2020
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
VIII
IX		 Tax expense
(1) Current Tax
(2)Deferred Tax		 ‐
(0.40)		 0.20
(13.13)		 (2.73)
2.29		 0.20
(13.31)		 120.60
(28.10)		 (0.19)
(23.90)
Net Profit/(Loss) for the period (VII‐VIII) 4.68 (33.91) 5.94 (18.50) 419.38 53.37
X
XI
XII
XIII
XIV		 Other Comprehensive Income (Net of Taxes)
A (i) Items that will not be reclassified to profit or loss
(ii) Income tax relating to items that will not be reclassified to profit or loss
B (i) Items that will be reclassified to profit or loss
(ii) Income tax relating to items that will be reclassified to profit or loss		 ‐
‐
‐
‐		 0.91
(0.23)
‐
‐		 ‐
‐
‐
‐		 0.91
(0.23)
‐
‐		 0.28
(0.07)
‐
‐		 (0.70)
0.18
‐
‐
Total Comprehensive Income for the period 4.68 (33.23) 5.94 (17.82) 419.59 52.85
Paid ‐Up Equity Share Capital ( Face Value(₹10/‐ per share)
Reserves (Excluding Revaluation Reserves)
Earnings Per Share(₹) ‐ Basic (Rs.)
‐ Diluted(Rs.)		 38.60
‐
1.21
1.21		 38.60
‐
(8.79)
(8.79)		 38.60
1.54
1.54		 38.60
‐
(4.79)
(4.79)		 38.60
108.66
108.66		 38.60
3,384.28
13.83
13.83

HEG Ltd © LNJ Bhilwara Group

13

Profit & Loss for Quarter ended 31[st] December 2020 - Consolidated

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in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores in Rs. Crores
Sl. No. Particulars Quarter Ended Nine Months Ended
31‐12‐2020 **30‐09‐2020 ** 31‐12‐2019 31‐12‐2020 31‐12‐2019 31‐03‐2020
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
I
II
III
IV
V
VI
VII		 Revenue from Operation 319.59 322.88 393.69 875.75 1,774.59 2,149.02
Other Income 25.35 16.41 27.28 87.80 101.46 143.76
Total Revenue (I+II) 344.94 339.29 420.97 963.55 1,876.05 2,292.78
Expenses
Cost of materials consumed
Purchase of stock ‐in‐trade
Changes in inventories of finished goods, work‐in‐ progress and stock‐in‐trade
Employee benefits expense
Finance cost
Depreciation and amortisation expense
Power and Fuel (Net of Interdivisional Purchases)
Other Expenses
Total expenses (IV)		 142.65
‐
61.75
13.47
1.27
18.53
31.75
71.24
340.66		 158.29
‐
93.12
12.51
3.04
18.34
30.19
70.64
386.13		 261.01
‐
7.28
17.48
8.73
17.79
39.90
63.28
415.47		 387.47
‐
220.99
39.75
10.28
54.64
89.85
192.17
995.15		 1,089.52
‐
(231.87)
69.35
27.93
53.26
128.75
227.23
1,364.17		 1,558.13
‐
62.95
65.60
36.51
72.13
163.31
304.86
2,263.49
Profit/(Loss) before exceptional items and tax (III‐IV) 4.28 (46.84) 5.50 (31.60) 511.88 29.29
Exceptional Items ‐ ‐ ‐ ‐ ‐ ‐
Profit/(Loss) before Tax(V‐VI) 4.28 (46.84) 5.50 (31.60) 511.88 29.29

HEG Ltd © LNJ Bhilwara Group

14

Profit & Loss for Quarter ended 31[st] December 2020 - Consolidated

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in Rs. Crores

Sl. No. Particulars Quarter Ended Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended
31‐12‐2020 **30‐09‐2020 ** 31‐12‐2019 31‐12‐2020 31‐12‐2019 31‐03‐2020
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
VIII
IX
X		 Tax expense
(1) Current Tax
(2) Deferred Tax
Share of Profit/ (loss) of associates		 ‐
(0.40)
(5.48)		 0.20
(13.13)
18.55		 (2.73)
2.29
(7.17)		 0.20
(13.31)
16.64		 120.60
(28.10)
25.22		 (0.19)
(23.90)
14.26
Net Profit/(Loss) for the period (VII‐VIII+IX) (0.80) (15.36) (1.23) (1.86) 444.60 67.63
XI
XII
XIII
XIV
XV		 Other Comprehensive Income (Net of Taxes)
A (i) Items that will not be reclassified to profit or loss
(ii) Income tax relating to items that will not be reclassified to profit or loss
B (i) Items that will be reclassified to profit or loss
(ii) Income tax relating to items that will be reclassified to profit or loss
C. Share of Other comprehensive Income of Associates		 ‐
‐
‐
‐
(0.07)		 0.91
(0.23)
‐
‐
(0.04)		 ‐
‐
‐
‐
(0.01)		 0.91
(0.23)
‐
‐
(0.16)		 0.28
(0.07)
‐
‐
(0.02)		 (0.70)
0.18
‐
‐
(0.11)
Total Comprehensive Income for the period (0.87) (14.72) (1.24) (1.34) 444.79 67.00
Paid ‐Up Equity Share Capital ( Face Value(₹10/‐ per share)
Reserves (Excluding Revaluation Reserves)
Earnings Per Share(₹) ‐ Basic (Rs.)
‐ Diluted (Rs.)		 38.60
‐
(0.21)
(0.21)		 38.60
‐
(3.98)
(3.98)		 38.60
(0.32)
(0.32)		 38.60
‐
(0.48)
(0.48)		 38.60
‐
115.19
115.19		 38.60
3,473.12
17.52
17.52

HEG Ltd © LNJ Bhilwara Group

15

Business Position under COVID-19

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’ Company s Position :

  • The liquidity position of the company is quite robust.

  • The is a size of more than Rs. 1450 Crores at the end of company having treasury

  • December 2020. Further, the company is long term debt free.

  • The company has also implemented stringent cost control measures across the organization to conserve cash to address any evolving situation resulting from the pandemic.

  • The will continue to monitor material of future company closely any changes arising

  • economic conditions and impact on its business.

HEG Ltd © LNJ Bhilwara Group

16

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Thank You

Mr.Manish Gulati : Executive Director : Mr.Om Prakash Ajmera Group CFO Mr.Gulshan Kr.Sakhuja : CFO HEG Limited Ph: +91 9910103865 Fax: +91 120 254 1575 Email: [email protected] [email protected]

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HEG Ltd © LNJ Bhilwara Group

17

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