HEG Ltd Management Discussions

The Global Economy

The global economic landscape has demonstrated resilience amid varying performance levels across nations, although with a mix of cautious optimism and lingering uncertainties, particularly against the backdrop of heightened geopolitical instability.

In 2024, the global economy recorded a real GDP growth rate of 3.3%, reflecting resilience despite intensifying downside risks. However, a slowdown in momentum became evident as policy uncertainties and geopolitical tensions escalated, setting a cautious tone for 2025.

Regional Progress: Chinas economic performance lagged projections. Conversely, the US market sustained strong momentum, supported by resilient consumer demand. India, the worlds fifth-largest economy with a GDP of US$3.91 trillion, displayed remarkable resilience in 2024, despite challenges like high inflation and global uncertainties.

Inflation: Global headline inflation declined to 5.7% in 2024, down from 6.8% in 2023 and 8.7% in 2022. . Despite easing inflation, levels remain above pre-pandemic rates, and the 2025 forecast is now 4.34%. There are notable differences among countries, as advanced economies may return to inflation targets sooner than emerging markets. The key challenge in 2025 is preventing global fragmentation and managing policy shifts without undermining long-term growth.

Manufacturing: In 2024, the global manufacturing sector exhibited a performance characterised by variability. China continued to serve as a significant catalyst, demonstrating robust expansion. European manufacturing also experienced mixed results. Manufacturing in the United States yielded mixed outcomes, with various indicators suggesting growth while others indicated a potential slowdown. Overall, global manufacturing sustained a modest expansion, with an anticipated growth rate of 0.6%.

Commodities: Commodity price trends in 2024 offer a mixed outlook. Ample supply and sluggish demand have kept commodity prices relatively stable in the latter half of 2024. Oil prices have faced continued pressure in late 2024, largely due to a lacklustre forecast for global demand and abundant supply.

Trade: Global trade hit a record US$33 trillion in 2024, expanding 3.7% (US$1.2 trillion), according to the latest Global Trade Update by UN Trade and Development. Services drove growth, rising 9% for the year and adding US$700 billion, nearly 60% of the total growth. Trade in goods grew 2%, contributing US$500 billion. Most regions saw growth, except for Europe and Central Asia.

Currency Fluctuation: Fluctuations in currency values and exchange rates are influenced by a myriad of factors, including adjustments in interest rates, inflationary trends, political developments, and global economic expansion. While the U.S. dollar demonstrated resilience, experiencing a rise of 7% in 2024 notwithstanding two Federal Reserve rate cuts, other currencies faced considerable volatility.

3.3%

Global GDP growth in 2024

0.6%

Global Manufacturing Expansion in 2024

5.7%

Global inflation in 2024

2.8%

Global GDP growth in 2025

Outlook: The global economy is expected to grow by 2.8% in 2025 and 3.0% in 2026. Global headline inflation will likely decline more significantly in 2025. Medium-term risks are mainly downside, while near-term risks are mixed. Policy interventions could disrupt disinflation trends, delaying monetary easing and affecting fiscal and financial stability.

Global headline inflation is projected to reach 4.3% in 2025 and 3.6% in 2026, with advanced economies reaching target levels of 2.5% by 2025. In line with this, crude prices are likely to decline in 2025. However, non-fuel commodity prices are set to rise by 2.5%, supporting growth in key resource-driven sectors.

Economic policy shifts and evolving trade dynamics will likely drive businesses to adapt, innovate, and compete in a rapidly changing global market. The IMF underscores the importance of proactive policymaking to support a smooth disinflation process and enhance market confidence. These create a dynamic business environment, encouraging strategic planning and resilience across industries.

The Indian Economy

Indias economic narrative for the fiscal year 2025 demonstrates notable resilience and consistent progress, with GDP growth anticipated to be 6.5%, notwithstanding global uncertainties and trade disruptions. Increasing Goods and Services Tax (GST) collections, heightened e-way bill generation, and an enhancement in consumer sentiment underscore the sustained momentum, particularly evident in the concluding quarter. A resurgence in manufacturing, along with stable rural demand propelled by rising household consumption, presents a depiction of strengthening economic activity, establishing a solid foundation for future growth.

The inflation landscape brightened considerably, offering relief to policymakers and consumers alike. Retail inflation eased to 4.6% in FY25, down from 5.4% the previous year, eases to a 6-year low of 3.2% in April25, aided by favourable weather, relatively stable commodity prices, an improved supply chain, and a sharp decline in vegetable prices. In contrast, wholesale inflation rose to 2.3% during the same period.

Indias growth rate Index for eight core industries increased by 4.5% during fiscal year 2025. The net GST collections increased by 9.4 % to fi22.08 trillion in FY25, indicating increasing economic activity despite global economic challenges.

Indias services exports have been the key driver behind the notable growth in overall exports. However, manufactured goods exports experienced a significant slowdown due to subdued demand in key destination markets and the impact of aggressive trade and industrial policies in major economies.

Gross Foreign Direct Investment (FDI) inflows grew nearly 14%, highlighting the economys appeal to international investors. This surge stems from investor-friendly policies, a large domestic market, and a stable economic environment. Moreover, India has ample foreign exchange reserves covering about 11 months of imports and nearly 90% of external debt, strengthening financial resilience and currency stability.

Outlook: FY26 appears optimistic, with GDP growth projected at 6.5%. The governments fiscal roadmap, targeting a 4.4% deficit, aligns with its vision to make India the worlds third-largest economy by 2030. The governments commitment to fiscal consolidation remains unwavering, supporting its goal of keeping the budget gap below 4.5% by FY26.

This trajectory may encounter challenges due to geopolitical volatility, trade disruptions, and fluctuations in commodity prices. Domestically, the primary drivers include private investment, consumer sentiment, and corporate wages. Enhanced agricultural performance, easing food inflation, and macroeconomic stability could stimulate rural demand.

The Steel Sector

Global Steel Sector

The global steel industry has been navigating a challenging environment marked by geopolitical tensions, disruptions in supply chains, and fluctuating demand. In 2024, ongoing conflicts in Israel and Gaza, the situation in Ukraine, heightened tensions in the Red Sea – including Suez Canal disruptions caused by Houthi rebels, have intensified global trade challenges. For the steel industry, these developments have led to rising transportation costs, disruptions in raw material supply chains, and a slowdown in production. These effects are further intensified by prevailing economic uncertainties and evolving trade restrictions, adding additional pressure on global steel industry.

These disruptions, resulted in a 0.8% decline in total crude steel production to 1,882.6 million metric tons (mmt) in 2024 from 1,897.9 mmt in 2023. China remained the dominant producer, though its 1.7% decline in output reflects the impact of strict regulations and a slowdown in domestic demand.

Several major economies, including Japan (3.4% decline), U.S. (2.4% decline), Russia (7% decline), and South Korea (4.7% decline), experienced production drops due to weakened demand. Although Germanys steel production rose by 5.2%, it remains well below pre-crisis levels, having declined significantly over the past 2–3 years due to the Russia-Ukraine war and high energy costs

Turkey, which makes more than 70% of its steel via recycled-content electric arc furnaces (EAFs), registered a 9.4% increase in steel production in 2024.

Crude steel production

Sr. No Country	2024	2023	Y-o-Y
1 China	1,005.1	1,022.5	-1.7%
2 India	149.6	140.8	6.3%
3 Japan	84.0	87.0	-3.4%
4 United State	79.5	81.4	-2.4%
5 Russia	70.7	76.0	-7.0%
6 South Korea	63.5	66.7	-4.7%
7 Germany	37.2	35.4	5.2%
8 Turkey	36.9	33.7	9.4%
9 Brazil	33.7	32.0	5.3%
10 Iran	31.0	30.7	0.8%
Total World	1,882.6	1,897.9	-0.8%
World ex china	877.5	875.4	0.2%

Source : World Steel Association. Estimates are subject to revision in the next update. The table above represents 71 countries.

India emerged as a prominent driver of growth, increasing its steel production by 6.3% (CY2024), driven by rising infrastructure projects and strong government support. This growth highlights Indias expanding role in the global steel market, positioning it as a key player in the coming years.

The steel industry faces a volatile landscape influenced by economic conditions, trade policies, and technological advancements. Despite short-term uncertainties, developing economies like India provide a model for growth, demonstrating that investment in infrastructure, sustainability, and innovation are essential for future stability and expansion within the industry.

Outlook: The global steel industry is projected to see a gradual recovery in 2025, with demand expected to grow by 1.2% after decline last year. This recovery will be driven by increased infrastructure projects, industrial expansion, and rising demand from key sectors such as automotive and construction.

Chinas steel demand is expected to remain sluggish in 2025 due to a weak property sector and slowing infrastructure investment. Domestic steel consumption is projected to decline by 1%, a smaller drop than the estimated 3% decline in 2024.

Indias steel demand is expected to grow by 8-9% in 2025, surpassing other major economies. This growth will be supported by increased steel-intensive construction in housing and infrastructure and steady demand from the engineering sector. EU steel demand is expected to recover in 2025, though consumption will remain below pre-pandemic levels. Also, North American automotive production is expected to see a steady recovery in 2025, contributing to a rise in demand for key steel product segments.

As infrastructure development and industrial expansion continue to drive consumption, the industrys resilience and adaptability will be key to sustaining long-term growth.

Chinas Dominance in World Steel

China remains the worlds largest steel producer and exporter, but 2024 showed sharp contrasts between the domestic market and external supplies. The countrys steel production decreased by 1.7% year-on-year, to 1,005 mmt, .

Exports, on the other hand, reached a record high of 110.72 mmt, up 22.7% from 2023. These imbalances clearly reflect the Chinese economys deep structural problems and significantly impact the global steel market.

Even though China has reduced steel production, exports continue to grow amid weak domestic demand. The main factor behind the decline in consumption is the slowdown in the construction and industrial sectors, which are usually the main consumers of steel. The Chinese government continues to implement a strict debt control policy, which restricts financing new infrastructure projects, thereby reducing the demand for steel in the domestic market. At the same time, rising energy costs and stricter environmental standards have also led to a decline in production.

However, this situation did not prevent China from actively increasing its exports. In 2024, the country exported 110.72 mmt of steel to foreign markets, an all-time record. The growth was driven by attractive prices offered by Chinese producers amid weak global demand.

The increase in exports amid a decline in domestic production indicates a change in the strategies of Chinese steel companies. Instead of adapting to weak domestic demand, they are actively looking for foreign markets. This puts additional pressure on the global steel market, especially in the face of oversupply.

WHAT DOES THIS MEAN FOR THE GRAPHITE ELECTRODE INDUSTRY?

This suggests that production in Ex-China regions (where about 50% of steel is produced using the EAF route) dropped. As a result, the demand for graphite electrodes dropped in rest of the world except China.

Indian Steel Sector

Despite global supply chain challenges, the Indian steel industry has exhibited remarkable resilience, supported by domestic demand, strategic capacity expansions, and sustained infrastructure development. With steady growth and increasing investments, the sector continues to fortify its presence in domestic and international markets, reaffirming its role as a key pillar of industrial and economic advancement.

The steel industry has emerged as a key pillar of Indias economic growth, supporting diverse sectors as the country advances toward becoming a global manufacturing hub through initiatives like "Make in India." Contributing approximately 2% to the national GDP, India is now the worlds second-largest steel producer, further solidifying its position in the global market.

Indias steel production rose from 140.8 mmt in CY2023 to 149.6 mmt in CY2024, reflecting a 6.3% increase over the previous year. This growth momentum continued, with India steel demand expected to grow by 8-9% - 2025, underscoring the sectors sustained expansion and strengthening capacity.

During April24 to February25, Indias finished steel consumption was around 137.8 mmt . This represented a significant increase, with a growth rate of 11.3% year-over-year

During FY2025, India exported 4.9 mmt of finished steel, while imports stood at 9.5 mmt, highlighting the evolving trade dynamics in the sector. Indian steel companies faced challenges due to fears of a global slowdown and rising imports, which impact profitability. However, a revival is expected in the coming quarters, driven by lower raw material costs and a safeguard duty on imports.

Estimates for 2025: Steel demand in India will continue to outpace other major steel-consuming economies in calendar year 2025 with a growth of 8-9%, driven by a shift towards steel-intensive construction in the housing and infrastructure sectors along with better demand from engineering, packaging and other segments according to rating agency CRISILs report.

Long-term perspective: Long-term growth is anticipated, supported by infrastructure demand and softening Chinese exports, though global uncertainties remain a major concern. Indias steel consumption is projected to reach 206 mmt by 2030, with per capita steel usage expected to rise to 160 kgs. The industry is expanding its steel capacity through new steel plants. This aligns with Indias long-term vision of achieving 300 mmt annually in steelmaking capacity by 2030.

Demand Catalysts

Infrastructure development: Large-scale investments in roads, highways, railways, airports, and urban projects under government initiatives like Gati Shakti, Bharat-mala, and Smart Cities Mission are driving steel demand.

Manufacturing & Industrial expansion: The "Make in India" initiative and the Production-Linked Incentive (PLI) schemes are enhancing domestic manufacturing capabilities and augmenting the demand for steel across various sectors, including automotive, machinery, and capital goods.

Urbanisation & Real-estate growth: The rapid expansion of urban areas, the increasing demand for housing, and ongoing commercial real estate projects are significantly propelling the consumption of steel within the construction and building materials sectors. With Indias population reaching 1.44 billion and the urban population anticipated to rise to 675 million by the year 2035, the demand for steel in infrastructure and development is poised for substantial growth significantly.

Defense & Aerospace : Increasing investments in defense manufacturing and aerospace are generating demand for high-grade steel used in military and aviation applications.

The EAF Steel Sector

Decarbonisation in the steel industry is essential for reducing its carbon footprint. Advanced technologies such as electric arc furnaces, hydrogen-based steelmaking, carbon capture, and increased recycling and renewable energy use are promoting sustainability. With regulatory support and industry initiatives, the shift towards low-carbon steel production is gaining momentum.

The global steel industry is a major contributor to greenhouse gas emissions, accounting for approximately 7-9% of global anthropogenic COfi emissions .To align with the Paris Agreements climate goals, the steel industry must reduce its emissions by 93% by 2050. Achieving this ambitious target necessitates the adoption of innovative technologies and substantial investments in decarbonisation efforts.

Electric Arc Furnaces (EAFs) are pivotal in decarbonising the steel industry by offering a sustainable alternative to traditional blast furnace methods. Unlike conventional processes that rely heavily on coal and iron ore, EAFs primarily utilise scrap steel and electricity, leading to a substantial reduction in carbon emissions.

As of 2023, EAFs accounted for approximately 29% of global crude steel production. This method is notably more environmentally friendly.EAFs using scrap typically emit around 0.5 – 0.6 t CO2/t steel, compared to higher emissions from traditional blast furnace-basic oxygen furnace (BF-BOF) routes. The CO2 emission intensity of BF-BOF route is nearly 3 to 4 times higher than EAF route.

In 2024, 49% of the worlds steelmaking capacity (excluding china) was based on electric arc furnaces (EAFs). By 2030, EAF based steel production globally will comprise 36% of total steel, reflecting the industrys shift towards more sustainable and low-carbon technologies.

Adoption of the EAF Route by Key Steel-producing Regions

Europe: The European steel industry is transforming from blast furnace-basic oxygen furnace (BF-BOF) route to electric arc furnace (EAF) steelmaking to reduce carbon emissions and enhance sustainability. EAFs share of European steel production expected to increase from about 45% to over 50% by 2030, showing a commitment to eco-friendly practices. This transition includes adding over 40 mmt of new green steelmaking capacities, mainly through EAF or EAF-direct reduced iron (DRI), expected to be operationalised between 2025 and 2030. The shift to EAF steelmaking is crucial for Europes decarbonisation strategy and meeting global climate goals.

The US: EAF-based steelmaking is reshaping the U.S. market and industry by driving a shift towards more sustainable and cost-efficient steel production. Its reliance on recycled scrap steel reduces dependence on raw material imports, strengthening domestic supply chains and improving market resilience. The US has experienced a significant shift in steel production methods, with Electric Arc Furnaces (EAFs) now accounting for approximately 70% of domestic steel output making US as one of the largest EAF steel manufacturer. The flexibility of EAF technology allows producers to quickly adapt to fluctuating demand, making the U.S. steel industry more competitive globally. By 2030, North America, is expected to add about 25 mmt of new EAF capacity.

China: Chinas steel industry is transitioning to more sustainable practices by adopting Electric Arc Furnace (EAF) technology. As of January 2024, China has about 151 mmt per annum of EAF capacity, while 913 mmt per annum relies on traditional methods. By 2030, China aims for EAF steel production to exceed 20%, supporting its goals to peak COfi emissions before 2030 and achieve carbon neutrality by 2060.

Other regions: Asia-Pacific is at the forefront of EAF adoption, with increasing investments in green steel production and circular economy initiatives. The demand for high-quality steel, government policies on carbon reduction, and advancements in automation are shaping the industrys future. The Electric Arc Furnace (EAF) share in global steel production is projected to increase in Asia-Pacific region leading the transition towards sustainable steelmaking.

The Graphite Electrode Sector

Graphite electrodes play a vital role in global decarbonisation efforts by driving the shift towards low-carbon steel production and are an essential component for producing steel in Electric Arc Furnaces (EAFs). Graphite electrode is required due to its high thermal conductivity, low electrical resistance and oxidation resistance, ensuring efficient and reliable performance in high-temperature industrial applications.

In electric arc furnaces (EAFs), graphite electrodes are essential for conducting electricity and generating the intense heat needed to melt raw materials, primarily in steelmaking and ferroalloy production. When connected to a power source, these electrodes create an electric arc between their tip and the metal scrap inside the furnace, producing temperatures as high as 3,000?C. This extreme heat efficiently melts metals, making EAFs a more sustainable alternative to traditional blast furnaces.

Despite its advantages and increasing relevance in the global drive to a decarbonised world, Graphite electrodes are manufactured by a handful of players globally (excl. China). This is owing to the extremely guarded technology and limited availability of needle coke worldwide. These realities prevent the entry of new players in this business space. Resonac, GrafTech International and HEG Limited dominate the market, leveraging advanced manufacturing technologies and strong supply chain networks. HEG was the last entrant into this space about five decades ago and is now the third-largest graphite electrode company with largest graphite electrode plant at one location in the western world

HEG continues to be amongst the lowest cost producer of electrodes, more so with our last expansion which brought our capacity to 100,000 mt

GREEN STEEL IN INDIA

Indias Steel Ministry announced a formula for defining ‘green steel, categorising it into three groups based on the quantity of carbon emissions per metric ton of the alloy produced. Steel produced with carbon dioxide emissions of less than 2.2 tons per tonne of finished steel would be defined as"green steel," while that produced with emissions below 1.6 tons per ton would be classified as"five-star green-rated steel" – the best among the three.

In the near term, the outlook for graphite electrodes remains challenging due to geopolitical instability and muted steel production and demand however the long-term outlook for the graphite electrodes industry is very promising.

The demand for graphite electrodes is expected to grow steadily as the steel industry increasingly embraces the electric arc furnace (EAF) method for production.

With countries and regions intensifying their efforts toward decarbonisation, projections indicate that around 170–180 million tons of EAF capacity (excluding China) will be introduced by 2030.

This shift is anticipated to generate an additional requirement of approximately 200,000 tons of graphite electrodes to support the expanding infrastructure.

This transition underscores the crucial role graphite electrodes will play in the steel industrys evolution toward sustainability.

SWOT Analysis

Strengths	Weaknesses	Opportunities	Threats
• Graphite Electrodes are irreplaceable in EAF steelmaking. steel makers using the EAF route.	The graphite electrode industry is intrinsically linked to steel demand, as its usage is driven primarily by the level of steel production.	As the world transitions towards Green Steel, the demand for Graphite Electrodes is expected to scale.	Supply-chain disruptions and alternative methods like hydrogen-based-steel making may lessen the importance.
• A streamlined industry dominated by a handful of global players.

About the Company

HEG Limited, though a 53-year-old company, is the youngest player in the graphite electrode space globally. Its manufacturing facility, near Bhopal in Central India, houses a 100,000 tons manufacturing capacity, the largest plant at a single location in the Western world. The Company is consistently exporting about 70% of its production to global steel majors.

Operational Performance

The Companys FY25 performance was shaped by a subdued market environment driven by global economic volatility and trade disruptions.

Having stabilised the plant operations post expansion to 100,000 tons, the Company operated the plant at about 80% capacity utilisation with a base level of 100,000 tons in FY25 against 80% at 80,000 tons, in FY24.

Electrode pricing remained under pressure due to subdued demand, even as needle coke prices stayed stable for the past two to three quarters. Although sales volumes increased, overall performance was impacted by lower realisations compared to the previous fiscal year, resulting in a narrowing of profitability.

Financial Performance

The subdued global steel market impacted the Companys financial performance as subdued demand resulted in considerable price erosion and reduced profitability.

Hence, Revenue from Operations dipped from Rs.2,395 crore in FY24 to Rs.2,153 crore in FY25. EBITDA dropped from Rs.526 crore to Rs.388 crore over the same period. Net Profit decreased from Rs.232 crore in FY24 to Rs.101crore in FY25. The Net Cash Flow from Operations also dropped from Rs.615 crore in FY24 to Rs.319 crore in FY25.

Networth stood at Rs.4,160 crore as of March 31, 2025, against Rs.4,145 crore as of March 31, 2024. The Return on Networth stood at 2.44% in FY25 against 5.63% in FY24. With a rebound in the fortunes of the global steel sector in the current year, the performance is likely to witness an uptick.

Key Ratios

Particulars	2024-25	2023-24	Variance	Reasons for change
Operating Profit Margin (%)	2.80	8.74	-67.93%	Operating profit margin has decreased due to fall in sale prices and loss on fair value of investments booked in other expenses.
Return on Net Worth (%)	2.44	5.63	-56.68%	Net profit has decreased due to lower margins and loss on fair valuation of investments.
Net Profit Margin (%)	4.74	9.73	-51.28%	Net profit margin has decreased due to reduced margins and loss on fair valuation of investments.
Interest Coverage Ratio	4.77	9.82	-51.41%	Earning before interest has decreased due to reduced margins and loss on fair valuation of investments.
Current Ratio	2.19	2.23	-1.93%	-
Debt-Equity Ratio	0.14	0.15	-5.90%	-
Debtors Turnover Ratio	4.51	4.77	-5.53%	-
Inventory Turnover Ratio	0.74	0.87	-15.56%	-

Internal Control and Its Adequacy

The Company maintains a comprehensive internal control system to achieve its objectives, evaluate risks, and ensure reliable financial and operational reporting. A well-structured framework of checks and balances protects assets, ensures compliance with regulations, and fosters ongoing procedural and systemic enhancements.

The Company utilises an ERP system equipped with integrated controls to facilitate timely financial reporting. A systematic auditing process periodically assesses internal controls, as well as legal, regulatory, and environmental compliance. The internal audit team evaluates the effectiveness of these controls and implements necessary improvements. Furthermore, the Audit Committee of the Board supervises financial and audit controls.

Quality Management

At HEG, Quality Management is fundamental to the Companys culture. It goes beyond simply ensuring superior products—its about consistently exceeding customer expectations. By eliminating defects and adding value at every production stage, HEG is committed to delivering the highest-quality products with unwavering excellence.

Quality Management flows seamlessly from leadership to the shop floor and vice versa. HEG fosters a culture where everyone is encouraged to contribute innovative ideas to enhance product and service quality.

At The Shopfioor: HEGs manufacturing unit operates efficiently, utilising standard operating procedures (SOPs). This structured approach enables centralised control, ensuring streamlined operations and improved performance. The Company follows a dual approach to quality, focusing on both processes and products. HEGs products maintain high quality due to stringent processes applied across manufacturing and other operations, effectively reducing wastage. Quality checks are conducted at each stage, from selecting raw materials to manufacturing and post-production, maintaining high standards. Quality training is regularly provided across all levels to ensure adherence to excellence. HEG remains proactive in identifying upskilling opportunities, ensuring customer satisfaction and long-lasting business relationships that reflect its consistent quality standards.

At the Top Floor: HEG has adopted business process automation across the organisation to minimise human errors and ensure timely and efficient customer service internally and externally. A detailed system of checks and balances at every level improves product quality and operational performance.

The senior marketing and management teams regularly engage with key customers to gather feedback to enhance product quality. Experts carefully examine this feedback before integrating it into operational processes to support ongoing improvement. HEGs commitment to excellence has positioned it as a reliable service provider to the worlds top 25 steel producers.

Innovation

The Research and Development team is led by esteemed scientists, who are instrumental in facilitating substantial advancements in process optimisation and enhancing product quality. Furthermore, the team is engaged in the development of innovative carbon materials and alternatives aimed at improving energy efficiency, thermal regulation, and environmental management. With a steadfast commitment to growth and profitability, the R&D team collaborates with prominent research centres to investigate novel and sustainable strategies for future expansion.

ESG - Charting a Sustainable Future:

HEGs Journey Through Environmental Stewardship, Social Empowerment, and Governance Excellence This year, our mission places sustainability at the core of our graphite manufacturing, recognising that stewardship of natural resources is vital to our success. We are enhancing energy efficiency, reducing our consumption and emissions, and actively supporting global efforts to combat climate change. We are responding to customer needs, focusing especially on the rising demand for eco-friendly options, which aligns us with market trends and enhances our competitive edge. We have strengthened our sustainable practices and enhanced the resilience and adaptability of our business, allowing us to manage market volatility and regulatory shifts. We have published our first ESG Report for the year 2023–24 and will continue to update it every year.

Human Resources

The proficient, accountable, and highly driven team at HEG is indispensable for sustainable growth. The organisation places a high priority on ensuring that employees are well-informed, engaged, and connected.

The Company is unwavering in its dedication to employee development, with the Human Resources department concentrating on ongoing technical, business, and behavioural skill enhancement. Employees are encouraged to participate in dynamic team-building activities that foster collaboration and teamwork. The organisation commemorates festivals and national events to reinforce team dynamics beyond the workplace. Furthermore, the Information Technology department has developed applications that improve organisational transparency and customer connectivity.

Risk Management

HEG implements a comprehensive risk management process to effectively identify and mitigate business risks. Its structured Enterprise Risk Management (ERM) framework is integral to decision-making and the assurance of long-term profitability. The ERM framework adheres to an annual cycle characterised by the establishment of objectives, an ongoing identification of key risks, the formulation of mitigation strategies, the monitoring of leading indicators, and the resolution of potential gaps.

OUR COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY

Celebrating a Year of Impact: Our Commitment to Purpose and Progress

At HEG, our Corporate Social Responsibility (CSR) is more than just a commitment — it embodies everything we stand for. We believe that true growth transcends financial success and is rooted in the positive impact we create. From expanding access to healthcare and education to alleviating poverty, our actions embody sustainable, inclusive development as the foundation for lasting success. We implement eco-friendly practices and foster an inclusive workplace, ensuring all stakeholders feel valued. This years CSR highlights milestones and lives impacted through our initiatives.

1 The Akshaya Patra

2 Global Vikas Trust

3 Graphite School

4 Apna Ghar Ashram

5 Ashoka University

6 Sabhyata Foundation

The Akshaya Patra: Sustaining Smiles, Empowering Futures

HEG continues its proud association with The Akshaya Patra Foundation, advancing our shared vision of eradicating classroom hunger and empowering the next generation through nutrition and education. What began as a modest initiative serving 1,500 students in five government schools has evolved into the worlds largest NGO-run school feeding program, operating 75 automated kitchens across 16 states and 2 union territories.

Today, Akshaya Patra provides nutritious mid-day meals to 22 lakhs + underprivileged children across 24,000+ schools—all within a 40-kilometre radius of its kitchens—every school day. These meals do more than nourish; they encourage school attendance, reduce dropout rates, and empower families by breaking the cycle of poverty through education.

HEGs fiagship CSR initiative—the first Akshaya Patra kitchen in Madhya Pradesh, built at a cost of fi14 crores —has become a beacon of hope for children in the Bhopal and Raisen districts. Since its inauguration, the kitchen has served mid-day meals to approximately 50,000 students across 900 government schools.

The kitchen is equipped with semiautomated, state-of-the-art infrastructure and ensures the highest hygiene standards, efficiency, and scalability. This centralised model allows for safe preparation and seamless distribution, ensuring that no child in the region goes hungry.

In April 2024, Akshaya Patra reached a historic milestone of 400 crores of cumulative meals served— a globally recognised and felicitated achievement at the United Nations Headquarters in New York.

As we reflect on this remarkable journey, we reaffirm our commitment to driving change through collaboration and compassion. Together, with Akshaya Patra, we are building not just stronger communities, but a more stronger, more hopeful India—nourished by every plate, uplifted by every child, and built one boundless tomorrow every time.

"HEG/Akshaya Patra Bhopal has served 1.7 cr meals to school children as on date since the establishment of the kitchen."

Global Vikas Trust: Mitigating Economic Deprivation through Sustainable Agriculture

HEG is proud to partner with Global Vikas Trust (GVT), a non-profit organisation founded by Mr. Mayank Gandhi, whose mission is to transform rural India through sustainable agriculture. What began in Parli, Maharashtra—once known for the highest number of farmer suicides—has now become a replicable model of hope and prosperity. With HEGs support, GVT expanded its impact to Madhya Pradesh, empowering over 30,000 farmers across India to transition from traditional crops to fruit-based horticulture.

Together with GVT, we continue to advance inclusive rural development, promote environmental stewardship, and build resilient agricultural communities—planting the seeds for a stronger, self-reliant India.

According to a recent study by the Tata Institute of Social Sciences, this model has led to a tenfold increase in farmer income—from an average of C38,723 to H3,93,986 per acre—underscoring the transformative potential of sustainable farming and market-driven linkages.

Empowering Education through Graphite School

At HEG, we believe that quality education is the foundation of community progress. In the mid-1970s, when our plant in Mandideep became operational, the region lacked access to formal schooling. Recognising this gap, our founder, Mr. L.N. Jhunjhunwala envisioned and established Graphite Higher Secondary School—a commitment that has stood strong for nearly four decades.

Responding to growing community demand and the schools rising reputation, HEG inaugurated a new campus in 2023, built at a cost of fi22 crore, expanding capacity from 1,300 to 2,500 students. The new facility features modern infrastructure and an enhanced academic environment, further solidifying the schools position as the most sought-after institution in the area.

1. Academic Excellence

The year witnessed stellar academic performance, with students achieving remarkable results in Class 10 and 12 board exams. This success reflects the dedication of both faculty and students, and reinforces the schools standing as a hub of academic excellence in the region.

2. Infrastructure & Innovation

HEGs ongoing investments have enabled the school to offer state-of-the-art classrooms, laboratories, libraries, and sports facilities—creating a dynamic and holistic learning ecosystem that inspires and empowers.

3. Holistic Development & Experiential Learning:

This year, Graphite School introduced several standout initiatives under Holistic Development & Experiential Learning, including Brainiac Splash 2024 – Interdisciplinary Innovation Exhibition, the Dome Planetarium Program, the Seed Bank Initiative by the SDG Club, Visit to Scope Global Skills University for Class XII students, etc.

Apna Ghar Ashram: A Home for the Homeless

Established in 2000 by Dr. Bharadwaj, Apna Ghar Ashram is a sanctuary for the homeless and destitute, offering food, shelter, clothing, and medical care—all free of cost. Known affectionately as Prabhujans (children of God), the residents find not just a safe haven, but a loving family environment where dignity and respect prevail.

Driven by unwavering dedication,

Apna Ghar has grown to operate 62 branches across 11 states, caring for over 12,500 Prabhujans nationwide.

In 2019, with support from HEG, a new centre was launched in Bhopal to serve 50 Prabhujans. Recently, the Ashram moved to a larger facility,

now providing care and shelter to 125 Prabhujans.

Over the past five years, HEG has been privileged to support the care of 550 Prabhujans, with 150 successfully reunited with their families—restoring hope and rebuilding lives even in the most challenging circumstances.

Ashoka University: Strengthening Indias Foundation

HEG is proud to continue its longstanding support for Ashoka University, a visionary institution that has redefined higher education in India. Born from the collective dream of some of the countrys leading industrialists in 2007, Ashoka was established to provide world-class, holistic liberal education—accessible to both Indian and international students, right here in India.

Ashokas mission goes beyond academic excellence. It champions inclusivity through need-based scholarships, ensuring that no deserving student is denied a quality education due to financial constraints. With a strong emphasis on critical thinking, research, and leadership, Ashoka nurtures the changemakers and thought leaders of tomorrow.

HEG is honoured to be one of the founding contributors to this transformative initiative and remains deeply committed to supporting the universitys journey. Through our continued partnership, we reaffirm our belief that empowering young minds through education is key to building a brighter, stronger India.

Advancing Sustainable Tourism and Cultural Heritage – Sabhyata Foundation

HEG partnered with Sabhyata Foundation to promote sustainable tourism and heritage conservation. In the past two years, we supported the restoration of the Red Fort with a fi70 crore investment and are now focused on the Bhimbetka Rock Caves, a nearby UNESCO World Heritage site.

Recognising our expertise, the Government of India has entrusted us with projects at Safdarjung Tomb, Purana Qila, Humayuns Tomb, Mehrauli Archaeological Park, and Gandikota Fort.

Through Bhilwara Sur Sangam, our annual classical music festival, we celebrate Indias rich cultural heritage, now in its 11th year, with performances by leading artists.