Ladies and gentlemen, good day and welcome to HEG Advanced Materials Limited Q2 and H1 FY 2027 earnings conference call hosted by 360 ONE Capital Market Private Limited. As a reminder, all participant lines will be in the listen-only mode and there' ll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratim Roy from 360 ONE Capital Market Private Limited. Thank you and over to you, sir. Please proceed.
Hi, good afternoon everyone. On behalf of 360 ONE Capital Market Research, I welcome you all to the Q2 and H1 FY 2027 earnings conference call of HEG Advanced Materials Limited. We' re pleased to have with us today Mr. Riju Jhunjhunwala, Chairman, Managing Director, and CEO, Mr. Om Prakash Ajmera, Joint Managing Director, CEO Hydro Business and Director and Group CFO, Mr. Puneet Anand, Group CSO, Mrs. Neha Rajvanshi, CFO, Mr. Ravi Gupta, Company Secretary and Compliance Officer, Mr. Hiren Shah, Managing Director and CEO, REPLUS Engitech Private Limited, and Mr. Ankur Khaitan, Managing Director and CEO, TACC Limited. Before we begin, I'd like to remind everyone that today's discussion may contain forward-looking statements. These statements are based on the company's current expectations, assumptions, and estimates regarding future events and are subject to various risks and uncertainties.
Actual results may differ materially from those expressed or implied in these statements. We encourage participants to refer to the company's filings with the stock exchange for a detailed discussion of the risk factor. Now, I would like to hand over the call to Mr. Riju Jhunjhunwala for his opening remarks. Over to you, sir.
Thank you and good afternoon, everyone. Thank you for taking the time to join us today for our Q2 2027 earnings call. Before we dive into the numbers, I want to take a moment to celebrate a major milestone in our corporate journey, the successful completion of our demerger with HEG Limited, now operating as a pure-play graphite electrode platform, and HEG AM stands proudly on its feet as a dedicated future-facing advanced materials and clean energy powerhouse.
This gives both entities the clarity to execute their distinct strategies unhindered, and I want to sincerely thank our shareholders, regulators, and legal teams for making this smooth transition a reality. For those who are new to our story, HEG AM is built on the LNJ Bhilwara Group's solid 65-year+ legacy of scaling large industrial projects into highly profitable ventures. Our core motto across we do here is simple, research to revenue.
Today, we operate through three fantastic pillars. TACC, focusing on advanced carbon, battery anodes, and graphene, REPLUS Engitech, driving battery energy storage solutions and EV solutions, and of course, our green power business, which provides stable, debt-free cash flows to back our high-growth ambitions. When we look at the macro environment, the tailwind could not be stronger. The global shift towards clean energy is moving faster than ever. Global lithium-ion battery production is projected to climb from roughly 3 TWh in 2026 to 8 TWh by 2035. Naturally, graphite anode demand is tracking right along with it, expected to jump from nearly 2.9 million metric tons today to 8 million metric tons over the same timeframe. Crucially, as global supply chains diversify, non-China anode demand alone is set to exceed 1 million tons by 2030.
Thanks to forward-looking policies of the Government of India, PLI schemes, et cetera, our domestic cell capacity is projected to reach 250 GW by 2035. On top of that, stationary BESS is turning into our fastest-growing segment, driven by data centers and grid stability, accounting for nearly 28% of the total lithium-ion market by 2030. We' re sitting right where the market needs us to be. Looking at how we plan to capture this growth over the next two or three years, our execution map is fully underway. On the anode front, our phase one 20,000 metric ton plant at Dewas is already 61% complete, tracking for commercial commissioning by June 2027. We' re already in advanced discussions for over 100,000 metric tons of customer MOUs.
Looking further ahead, we have already laid out our phase two expansion to scale total capacity to 44,000 metric tons by March 2029 on the same land and on the same power footprint. As part of this scale-up, we' re strategically driving backward integration into manufacturing our own graphitized crucibles in-house. On graphene is a revolutionary single-layer carbon wonder material whose multi-use properties transform performance across segments like concrete, paints, batteries, textiles, lubricants, and data center thermal management, among many other things.
Our 10 metric ton graphene pilot plant is set up and running, and we' re targeting 500 metric ton commercial plant to be operational by September 2028, with 90 tons of confirmed orders and LOIs already in hand. On REPLUS, we' re aggressively scaling our operational 1 GW footprint towards a 6 GW total capacity to capture the booming demand across EV mobility and stationary grid storage.
As we talk, we' re in active execution of around 1.5 GWh to 2 GWh of solutions. In closing, Q2 has laid down a very solid foundation for us. Our green power cash flows give us financial resilience, our technology sets us apart, and our team's execution discipline keeps us firmly on track. None of this would be possible without the relentless hard work of our leaders, engineers, plant workers, and to everyone across the group who embody our core values every day. To our board, our continuous supporters, thank you. We' re building HEG AM not just for the next quarter, but for sustainable long-term value creation.
Lastly, just to share with you all, our core values that we' re operating on remain: think scale, perfect execution, hardcore R&D and innovation, invest in our team, speed of delivery, maintaining a healthy risk-free balance sheet, and lastly, what we follow in our group, absolute gold standard business ethics. To walk you through the specifics of our financial performance for the quarter, I would now like to hand over the call to our CFO, Ms. Neha Rajvanshi. Neha Rajvanshi, over to you.
Thank you, Riju Jhunjhunwala , and good afternoon, everyone. It's an absolute pleasure to connect with all of you today following the truly pivotal quarter for HEG Advanced Materials. As our chairman sir outlined, our structural reorganization has given us the absolute clarity needed to build a world-class, globally competitive advanced materials platform. I will now take you through the financial performance of HEG Advanced Materials Limited for the second quarter and first half of FY 2027. Before discussing the numbers, I would like to highlight that following the recent demerger of graphite undertaking from HEG Limited, the comparative financial information for FY 2026 has been reinstated to exclude the demerged graphite business. This ensures a consistent like-for-like basis for comparison and provides investor with a clearer understanding of HEG Advanced Materials' financial performance.
Coming to quarter two, FY 2027 performance, our consolidated revenue from continuing operations stood at INR 430 crore, compared with INR 176 crore in the corresponding quarter last year. Our total income for the quarter is INR 547 crore. EBITDA from continuing operations stood at INR 313 crore, compared with INR 129 crore in Q2 FY 2026, translating into an EBITDA margin of 57%. Profit after tax from continuing operations increased to INR 209 crore, compared with INR 69 crore in the corresponding quarter last year.
Moving to our H1 FY 2027 performance, consolidated revenue from continuing operations stood at INR 726 crore, compared with INR 329 crore in H1 FY 2026. Our total income for the first half stood at INR 871 crore. EBITDA from continuing operations was INR 438 crore, compared with INR 270 crore in the corresponding period last year, with an EBITDA margin of 50%. Profit from tax from continuing operations is at INR 269 crore, compared with INR 168 crore in H1 FY 2026.
I would also like to highlight that a significant portion of the group operations in the hydro is in the hydro and wind power businesses, apart from our growing the BESS business. The green power business is seasonal in nature and highly dependent on weather conditions, wind patterns, and water availability, with a substantial portion of power generation typically concentrated between April to September. Accordingly, the financial performance is subject to seasonal variations, and the results of different reporting periods may not be directly comparable. To give you the exact snapshot of our consolidated balance sheet as on 30th September, 2026, our total consolidated equity stands exceptionally strong at INR 2,510 crore.
Our asset base, we hold a formidable consolidated total asset base of INR 4,436 crore, backed by INR 1,300 crore of cash and bank balances, against our long-term borrowing of INR 1,036 crore, which renders us comfortably net cash positive on an overall cash-to-borrowing basis. On the financial and strategic front, our priority remains to maintain a prudent balance between growth investments and financial flexibility. We will continue to focus on disciplined capital allocation, efficient utilization of resources, and timely execution of our ongoing capacities, extension projects across advanced materials and energy storage.
As these businesses scale up, our emphasis will remain on operational readiness, manufacturing efficiency, and building a sustainable financial foundation to support the company's long-term growth ambitions. With this, I would like to thank our shareholders, our customers, business partners, lenders, and employees for their continued trust and support. I would like to open the floor and hand it back to the moderator to take your questions, please. Thank you.
Thank you. Pratim sir. Thank you very much. Yes, sir. Please.
Thank you, Neha ma'am. Now I like to open the floor for Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Jatin Raghuwanshi from Avexat Equity. Please go ahead.
Good afternoon and congratulations on good set of numbers. Am I audible?
Yes, sir. You are audible. Please.
My first question is on crucible backward integration. Like you' ve told INR 475 crore CapEx is going to be happen and it will be replace 17 million of import. So I just want to know like saving flow in EBITDA margin or it's already in our guidance of 30%-35%. And one more, like in technology, this is in-house or we are licensing for this manufacturing CapEx?
Yeah. Hi, thank you for the question. I believe, I mean, you're wanting to understand about the crucible project that we' re doing as backward integration. So crucibles are a very important portion for the graphitizing of the anode powder. The project that we have made will make us completely self-sustaining, and we' ll not have to import the crucibles from China. In addition to that, we' ll be, in fact, selling crucibles outside after using half the crucibles ourselves. To tell you more about crucibles, I have Ankur here with me, who's Managing Director of TACC, and he would tell you more about the economics of it.
Hi. So, as Jatin mentioned, this is a very integral part of the production at the graphitization process. This is a cylindrical shape graphite, which is today largely concentrated in China, but we know it very well how to make. That's why we' ve taken up this project. The first intent is to be very self-sufficient because this is the only raw material which today is coming from China. Rest we' re completely non-China dependent. Second part is that we' ll have sufficient capacity of crucibles, which we can actually sell outside as well in the longer run. So this whole project is planned in a way that we' re able to have a very healthy EBITDA as well as a very healthy payback over a short period of time.
And this technology is in-house or we' re licensing this technology?
We know the technology very well. With HEG, we've been working on crucibles since last many, many years. We know the crucible technology very well.
Okay. My second question is on like Indian mega factory has been delayed. What volume did we assume in our earlier FY 2028?
Your voice is very, very heavy. Unfortunately, we can't understand what you are saying.
Sir, I am saying like Indian-
Sir, are you on loudspeaker, sir? Please, Mr. Jatin.
No, sir. No, no. Is it audible now?
It is audible, but sir, it' s a little bit. Yeah.
I am asking like Indian. Hello?
You can proceed. Yes.
Okay. The Indian mega factory has been delayed. In the starting, what was our volume assumption and how we are planning to fill this gap?
Honestly, sir, we are unable to get. Are you talking about demand and supply of-
Volume assumptions, yes.
Jatin, if you could repeat his question, please.
I think, sir, he will rejoin the queue. We' ve the next question from Nishita from Sapphire Capital. Please go ahead.
Yes. Hello. Thank you for taking my question. I' m looking over the company for the first time, so I am sorry if my question would be repetitive. I just wanted to understand what is the total CapEx for all of these expansions that you are doing. So, like you' re making anode material capacity and then graphene capacity, also crucible. So what is the total CapEx for this?
The total CapEx number, including the existing 20,000-ton capacity that we are building, plus the addisus extension, and the extension to 44,000-ton capacity, crucible, and graphene, it is INR 5,500 crore.
Okay. Can you break this up?
So, if I break it up, my current 20,000 ton capacity, the total CapEx is approximately INR 2,350 crore. My new additional capacity will come at comparatively per megawatt per metric ton, very less CapEx cost, so around like INR 1,600 crore for additional 24,000 ton capacity. We'll be spending
INR 1,600 crore. Sorry, INR 1,600 crore for additional 24,000, right?
24,000 capacity. We'll be spending INR 500 crore on graphene and INR 475 crore on my crucible, 80,000 unit facility that we will be developing. We' re already spending INR 250 crore on my REPLUS expansion from my 1 GW to 6 GW capacity, and another INR 230 crore on one of my BESS IPP projects that currently we' re doing in Gujarat.
Right. Okay. So, the crucible capacity is going to be 85,000 units, right?
80,000. Yeah.
80,000. Okay. What' s the asset turn that we can expect from this?
See, my different businesses has a different asset turn ratios. While graphene, the asset turnover ratio is approximately 1:1. The same is different from my anode business, where it' s comparatively higher.
Okay. What will it be in anode business?
Pardon?
0.8x.
Yeah, for anode it is 0.8x.
Anode asset turn is 0.8x . That's lower than the graphene, right? You said it's high.
Right, sir.
Okay. Understood. I wanted to understand, what sort of EBITDA margins can we expect from these businesses?
Yeah, EBITDA margins from our anode, because it is again, it is a price-sensitive information, but on a broader range, for anode it will be somewhere in the range of 28%-33%. My graphene will be higher.
Okay. So, higher than 33%?
Yeah, it is higher than 45%.
Okay. And with the crucible backward integration, our margins in anode will reach 35%. Is that right?
Right.
Okay. Understood. My next question is on, we have already listed the HEG Advanced Materials company. When are we going to list the HEG Limited, the original business?
Hi, Nishita, Puneet here on this side. We' re expecting the listing of HEG Graphite very soon. I think by third week of November, it will be listed. We' re waiting for our last approvals, and once we get the approvals, we'll come up with the date. Most probably it is the third week of November.
Right. Okay. I wanted to understand, for graphene capacity, we already have nine metric tons of orders in hand, but our demo capacity is just 10 metric tons. How are we going to do this order? How are we going to
Ma'am, graphene is basically a nanomaterial. This will not be a commodity, it's like a service as well. What happens is there is a journey behind it that since we have been working for more than two years on this, at the current facility, we' ve been catering in smaller batches, which is already like a commercial scale plant today, while the capacity is small. Based on this, the timeline is very well agreed for supply of the 90 metric ton orders what we have. This is very well aligned with our plant coming up, which is the first phase will be live by next year. The 90 metric ton will be serving the first from the main commercial plant, which is agreed with the customer.
Right. By when do we need to execute this? What' s the timeline?
It will start by second half of next year.
Okay, the execution of this order will start by H2 of FY 2028. Understood.
That's correct.
Right. Once we' ve the capacity, so 20,000 metric ton of anode material capacity also, and in the presentation we have mentioned that we already see visibility of 100,000 metric ton in that. How fast can we ramp up these facilities that we' re coming up with?
It' s only the first year. First year, as you can see, we have taken a very humble capacity utilization of 35%, because it is a construction plant. It's a large construction plant, which is never a plug-and-play plant. That is why the first year will have its own challenges, which we are mitigating as per the time.
At the same time, we' re confident that once the capacity goes beyond 50%, then ramping it from 50%- 90% and even beyond is not a problem because the equipment are very similar, and the capacity as well as the equipment are in a very linear way. Once we start with the 35%, then 35%-90% is not a problem. At the same time, the additional 24,000 tons is also not a problem. This is what we' re committing to ourselves as well as our shareholders, as well as our customers.
Right. Are we also going to export?
Yes, the first 20,000 tons will be majorly exports.
Okay, understood. Yeah, thank you so much.
Thank you, sir. Thank you, ma'am. The next question is from Nilesh Jain from Astute Investment Management. Please proceed, Mr. Nilesh.
Hi, thank you for the opportunity. My first question is to Neha. Obviously, you've given us the total CapEx in terms of INR 5,500 crore. Can you broadly split it by each financial year, maybe for the next three financial years, how much we will be capitalizing it?
My year-on-year CapEx out of this, the major part of the CapEx comes in FY 2027 and 2028, approximately INR 2,300 in the current year, followed by INR 1,600 crore-INR 1,700 crore of CapEx in next year. The balance will be incurred in financial year 2029.
Okay. Just wanted to get clarification. We were planning to do two projects on solar, C&I, and hydro. In hydro, we decided we would not be going ahead. On the solar, what is the status? Are we looking to go ahead with that, or we will not be going ahead with that project?
Hi, I have Mr. Ajmera with us, who is heading the hydro and the IPP division. He will just tell you a little more about that.
Okay.
Yeah, hi. As far as solar side is concerned, we are working on the 300 MW power project, standalone solar project on a C&I basis. Most probably, this project will come in line 12 months from now.
What would be the amount we would be spending for this?
We will be spending about INR 1,200 crore.
Hello, sorry?
INR 1,200 crore.
Okay.
Sure. The question is to Ankur maybe on graphene.
The project for which PPAs still under signing.
Okay.
That' s the reason. Currently in the CapEx number, it is not included.
Okay.
We will share PPAs once as in-
If it happens, this will be a very good kind of IRR project. Actively, we' re not really looking at many more C&I projects. Since this one is in our hand, it' s kind of very good double-digit IRRs in this, then we'll go ahead with this project once we sign it.
Sure. My other question is for Ankur Khaitan on graphene. Obviously, initially, we were planning to add 150 metric tons. Probably wanted to understand this 500 metric ton. 150 incremental capacity would be the following year. Obviously, based on the conversation which you would have with your customers, is it would be at the same location, the entire 500 metric ton, or it would be at a different location as well?
See, 150 tons, actually, it was about 150 to 200 tons what we had been contemplating earlier. Again, the graphene has got a major impact not only at the final usage level, but also at the environment level. That is how we have also contemplated on the volumes and the kind of traction we are getting with graphene in Indian as well as overseas geography. It made more sense to go up to 500 tons. We are going into a new location for graphene, and we have split that into two parts.
One is a 200 tons, the other is an additional 300 tons. The reason of delaying of this additional 300 tons is because there are certain permissions, et cetera, which will be required for the additional quantity in terms of the land, environment, et cetera, due to which it can come a little later. 200 tons, since the work we had already started, it can start much earlier. Yes, the reason of going up 500 tons is absolutely a customer pull, and we are very confident that this 500 tons is just a beginning.
Sure. Just one clarification. For the H1, we have done CapEx of almost INR 490 crore. Last part would be for the anode business?
Last part of that' s coming from the anode business, yes.
Okay. Sure. Thank you, and all the best.
Thank you. Ladies and gentlemen, for fairness to all, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The next question is from Mr. Kevin Gandhi from Capro Capital. Please go ahead.
Hello, sir. Thanks for taking my question. I hope my voice is audible. Good afternoon.
It's audible.
Yeah. Yeah, sir, my question was actually on the graphite electrode business. The sales have actually gone down by 20%-23% on a QOQ basis as the utilization decreased or the realization per ton has actually reduced. What's the reason for the downfall?
Actually, on the graphite electrode, we will be having a full conference call about the results, I think around one week after Diwali. All these, the specific questions related to graphite electrodes can be answered then. Yes, what you're saying is more or less true. Everything is pointing towards a higher trajectory, including the margins, et cetera, there. More about it later, I think, in the specific graphite electrode call.
Okay, got it. No issues. Thank you.
Thank you. The next question is from Anukul Arora from Sagun Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, I had few questions on the REPLUS division. Firstly, on the front, what kind of sustainable EBITDA margins are we seeing in the REPLUS division?
Hi, this is Hiren Shah here. Yeah, I'm here, sir. Firstly, when we started this REPLUS with 1 GWh capacity, since we had limited production capacity available, we targeted only electric vehicle, high voltage range, and some specific products in the UPS segment. Now we have the 5 GWh capacity, which is coming in and will be operational from next year. COD is March 2027. We will be manufacturing the BESS containers locally, and we have done the entire localization cycle, and we have also made products for the data center category. With this focus, I want to highlight that we are the company who have in-house capability of BMS, EMS, thermal management, design, and engineering.
With this kind of capability and this kind of production capacity, I think definitely we are shifting from what we were doing traditionally in the last two, three years as an EPC to product manufacturing and supply. Definitely with the localization and all these factors coming in, definitely there is a much more scope to improve the EBITDA margins and make this business more and more sustainable. Currently, I am not factoring the fact that a lot of thrust, and you must have seen in the new tenders which are coming with VGF and also NTPC, that there' s a local content requirement. All those factors will only add on. I am just saying purely by the capability point of view, we definitely working on the improvements of margins and sustainability.
Any ballpark number that you could provide us? If you could also provide us what was the rationale behind going into this business?
Basically, rationale is very simple, that more and more localization, like we have seen the trend in solar. Initially, most of the projects, and because there' s a huge demand. Let me start from the demand side that RE business, renewable energy business, definitely needs BESS. In the next 10 years, the demand is 480 GWh, just for the renewable energy storage. You' ve seen that the multiple CEA guidelines that have come starting from 1% going up to 10% will go up to 30% of storage, which will be mandatory with every renewable park. To top it up, there' s a strong EV demand coming from OEMs, and not every OEM has a capability of doing battery packs. Third, huge demand coming from data center.
Four, there' s a huge demand for DG replacement and the traditional technology of lead-acid battery replacement by future technologies like lithium-ion batteries. All of this put together, almost it is close to more than 1,000 GWh of lithium-ion battery demand in the next 10- 12 years. Definitely, there is a huge potential in this industry and a huge business opportunity for all of us.
To add to that, globally what' s happening, we know the geopolitical situation, and everybody is looking for China Plus One option. We have representatives and we have office in Dubai, and we' re getting solid traction from the EMEA market as well, which is just a buildup at this moment. Not much of business has been converted, but there is a lot of traction which is happening. Globally, everybody is looking at China Plus One option.
This is all helping us, and it's definitely a huge potential business. I mean, I can't name a perfect number for the EBITDA, but definitely double digit. Also, for different category of business, there' ll be different EBITDA margins. Like center has the best EBITDA margin, followed by EV, by BESS, and the UPS inverters. I can just say that.
Okay, sir. Sir, are we doing EPC or BOOT? If we are doing BOOT, how much CapEx are we thinking? On the working capital side, I think on the REPLUS, the working capital is generally stretched. If you could just throw some light on that side.
Actually, when we started, while we were building up the factory and while we were developing the products and getting the products certified, at this point of time, let me pause and also share that all the products that we have designed and manufactured are all certified for all the global standards. Even the BESS container, we' ve received all the international standard certifications for our BESS container. Data center products are all UL certified. Our telecom products are TSEC approved. All our home residential UPS products are IEC approved. EV is basically all ARAI and ICAT approved. While we were doing all of this, we were building up all these things.
Basically, we took a position of doing EPC business so that we can keep a connect in the market, and we can also have a relationship, establish working relationships with the IPPs and the developers. Not to forget the utilities and also study the market. We built up the EPC business as a first step, and then going forward, we' re going more towards the product sales. We are more focusing on manufacturing and supply of our products.
The ratio of EPC business over a period of time will come down. At this point of time, around 70%-80% of the business is EPC, and 20%-30% of the business is manufacturing and supply. From next year, actually from the next one, it will be around 20%. We' ll keep only for starting projects, and then focusing more on the supply side. This is how we plan to roll this out.
Sir, anything on the working capital side? I think working capital requirements are pretty high in this domain. So, anything you can throw some light on this?
EPC projects, and we know how these projects are dependent on multiple factors like land connectivity and so many things. I think ratio will focus more on the production and supply chain. It will improve. Currently, because we are doing 80% from EPC, yes, the cycles are longer, but yes, over a period of time, this will also change.
Okay, sir. Got it. Sir, my last question would be on the side of graphene business. So, what kind of realizations are we seeing in the graphene domain?
It's difficult to talk about realizations on graphene part because, as we said, it's a very customized product, changes a lot from industry to industry, and both from the technical perspective as well as the usage perspective. While we cannot comment on the realization perspective, but we can definitely say with quite confidence that nothing is spoken less than 35%, 40% of EBITDA margins right now, 35%-40%.
And also, like we're putting up a 500-ton plant or this thing, or at around INR 500 crore with around 1:1 capital output ratio. So, you can do the math yourself. I mean, the average would come out to be something around that. And with a healthy 40%, 45% EBITDA margin.
Okay, sir. Got it. Thank you so much, sir. Those were my questions. Thank you.
Thank you, sir. Participants, we request you all to please limit your questions to two per participant. The next question is from Mr. Rajat Setiya from ithought PMS. Please go ahead.
Yeah, hi. Sir, just wanted to check about the capacities that we are putting up. Do we have confirmed orders from our clients in the future, or how is it that we' re getting confidence about putting up so much of money?
I' ll take that question as it is the most appropriate question in terms of, we have set up a pilot plant around two and a half years back, through which we have had around more than 1,500- 2,000 rounds of sampling of our products going to customers. Now, the customers that you are talking about are all the non-Chinese cell makers, which could be in Korea, which could be in Japan, it could be large automotive players based out of the U.S., based out of Germany, Middle East, et cetera. Even Indian companies who are coming up with the cell companies. I mean, while almost all these contracts that we' re signed and are in the process of signing, they are very, very clear with us that they are on an absolute kind of no-name basis.
But I can tell you on a cumulative volume front, I think our decision to go up from 20,000 to 44,000 was led more by customer demand and less by intent. While we are in the process of signing all these documents, I think if we stuck to our plant of 20,000, we would not be able to provide even more than 25% of what the customer needs are. So, 44,000 tons, I mean, we can, once the plant is absolutely stable, which I think in six months it would be after our commissioning, it would absolutely not be an issue to sell 44,000, and we would be looking at our next portion of growth over there. 44,000, we' ve limited ourselves right now, as you recall, the current site that we are working on at the 105-acre site at Dewas.
After all kind of engineering and trying to fit in as many tons over there as possible, this is the number that maximum we could come up with, 44. We would have been happy if we could set up 60,000 in the same capacity. Getting customer traction is not a problem today, in fact. And this I'm talking about only the global customers today.
But don't forget, I mean, once the Indian customers start coming, let us say even 100 GW starts by 2030, that translates into 100,000 tons of anode material only, which would be needed by the Indian players. And we believe that we' re far ahead of the curve of any other company that plans to set up the anode material, because everyone has to go through that cycle of 12 to 18 months of pilot plant, testing, accreditation, et cetera, by the global players.
We are in a very comfortable situation over there, I mean, in terms of the overall plant, the kind of government support that we are getting. I mean, in a few days, we will be able to talk about it more in terms of the different programs that the government is running in terms of subsidy, et cetera, there. That is to answer your question. I mean, the customer demand is not at all an issue, and we already have around three or four confirmed signed LOIs. In the next three months, we' ll be signing at least three or four more, which will probably take the capacity to more than 44,000 if you actually add them all up. That is what gave us the confidence to do the initial 20,000 and then to 44.
Sure. Thanks for the detailed answer, sir. One more thing. In India, I think we are the only suppliers, going to be the only suppliers for these anode and graphene, right?
I think I will let Ankur answer that question.
Well, on anode, you know there are players who are working on it, but we have the first mover advantage, that is for sure, that when we are talking about 2027, then we' ll be the first to move ahead in India. There are players who are working, you know them very well. In graphene, at the scale we are talking about, yes, we're the first to be supplying and working at that scale, and to such a large base customers, because we' re not limited to one or two customers and one or two industries alone. We have a very big basket of industries which we' re catering to for our graphene.
Got it. Sir, these margins that we are making obviously is bound to attract a lot of competition in the market, and maybe from outside as well. How do you see overall market panning in the next three, four years, and the consequent effect on the economics of the business? Because right now, it looks very attractive.
See, I mean, in terms of, initially also what we said, I mean, today the global demand is around 3 TWh, which will go up to around 8 TWh, which takes up the anode demand that the total anode demand that is there, which would be around 3 million tons today to around 8 million tons. So, demand-wise, the way the lithium-ion ecosystem is moving, anode will always be in a short supply.
Any graphite-related product in the next five years, or 10 years I should say, is going to be in extreme short supply. Having said that, of course, we are competing. We' re one of the first plants that will be coming up outside of China. When we' re starting this particular plant, it's with the very clear intention that we are able to compete with the Chinese at every stage.
The power rate that we've been able to get from the government, the raw material that we have been working on from our parent company, HEG, for since a long time, our technology readiness in terms of this thing, and especially now adding this 24,000 tons to the 20,000 tons. Therefore, kind of we were putting up this 20,000 tons at INR 11 lakh per ton. Now, the balance 24,000 will be coming up at INR 6 lakh per ton. So, the average goes down to INR 9 lakh per ton, making us very, very competitive and making us a factory of scale. In terms of margin, I mean, we' re very confident that with the backward integration combined of the crucible project, we'll be able to do north of 35% in terms of the EBITDA margins in the anode.
In graphene, today we do not really see any major competition over there per se. Tomorrow, even if there is competition, the market is very large, and it's a custom-made product, so we will not be doing that at anything less than around 40%, 45% EBITDA margin there.
Are we the only company going to be, which is doing backward integration, or the competitors are also planning the same?
I mean, I am absolutely in no state to say that whether competition would be planning or not. What sets us apart from competition is one thing, is that since we have been producing graphite electrodes for a long time, the technology to make something like crucibles, et cetera, also does not come cheap, and it is available to us. How it is available to our competition is kind of up to them. We are very, very confident that we will be able to use all these crucibles and export half of them at a very, very healthy rate.
All right. Sir, one last one. The other income, what are the major constituents of this high other income that we have?
I'll let Mr. Ajmera talk about the other income. I can tell you that if you see the breakup of the other income, half of it would be something that would be recurring every year, and half of it would have been one time. Ajmera ji can explain better.
Yeah. Let me explain to you that most of the other income right now is coming from the transmission line. We have one dedicated transmission line of 175 km, and that has been converted recently into the green ISTS transmission lines. This transmission line was built up way back in 2011, and since then, this transmission line is being used by a couple of other developers also. We had been talking to the Government of India to get the revenue out of it, because other people are using our transmission line. Finally, we were able to get the order recently, about a year back, that yes, this transmission line is deemed to be an ISTS with retrospective effect from August 2011.
Therefore, there' s a one-time income, which is the arrears for the last 10 years, we received last year, and some of the portion is coming this year also. That' s why this portion is giving the other income at a higher level. Besides this, we have a regular transmission income also from the same transmission line. Recently, some of the income is coming from the insurance claim, which is not going to be there in the future. So, these two components are there. Otherwise, there is other income coming from the REC sale also, because our hydro projects are eligible for issuance of renewable energy certificates. So, this is also a regular income. So, partly there's a regular income, and partly is the one-time income.
Overall, this is an other income, which, as sir has said, is the regular income. So, half of the income is related to the interest what we have earned on the bank deposits and on our mutual funds.
Yeah, one thing I'll mention too.
recurring in nature.
Yeah. Forgot to mention that the company is sitting on a large amount of cash into the fixed deposit. So, this is a recurring income coming from the interest on FD.
Okay, sir. Thank you so much. Thank you.
Thank you, sir. The next question is from Jainis Chheda from Kemfin Family Office. Please go ahead.
Good afternoon, sir. Am I audible?
Yes, sir.
I have one single question. It's related to your segment financials. If I look at the segment financials, the revenue from power grew by 15% on a quarter-on-quarter basis, about INR 212 crore, but the segment EBIT went up by 64% to INR 190 crore. What was the reason for this higher increase in the EBIT margin?
It is basically because of the higher receipt of the one-time income in the second quarter. As Mr. Ajmera was explaining, which is in the form of interest, what we have received on our transmission line and the insurance claim amount, which leads to the higher EBIT in the second quarter.
So, if you can help me break this INR 190 crore of power segment EBIT, how much would be a steady-state basis and how much would be one-time?
So, approximately 40% of that is one-time, and remaining 60% is the regular EBIT.
Okay, got it. Thank you so much. So, that 40% will not be recurring in Q3 and Q4, right?
Yes.
Yes.
You are right.
Okay. Thank you so much.
Thank you. The next question is from Shreni from Centra Insights. Please go ahead.
Yeah. Good afternoon. As a new investor to your company, I wanted to obtain understanding on your anode business. Could you help me understand the raw materials composition of your finished anode materials, both in terms of volume and value? Could you provide the details of the sourcing mix, including which countries or suppliers this material are procured from, and what proportion is sourced domestically versus imported?
Thank you, ma'am. I'll help you give an overall detail, but there might be some things I can't say outrightly. First of all, when you're talking about the raw materials, there are two most important raw materials. One is the coke, which is basically a green petroleum coke. The other is power. Together, they take more than 60% of the overall cost. When you talk about the suppliers, then we'r e focusing on non-Chinese suppliers because that's the demand from our customers. Since you know, HEG is operating at more than 100,000 tons today. Basically, the suppliers are the same, and they have very independent feedstock for the anode raw material. We' re in advanced discussions with them, where they have given us some confidence that the supplies will not be a problem over the kind of quantities we' re targeting.
And the main geographies from where they come is, again, U.S., U.K., and Japan. And about the pricing, I mean, pricing is not something which can be very well discussed because there are larger ranges, and at the same time, there are a couple of grades between anode material itself, where the different grade of raw material goes. And anything else you want to know on the raw material side?
No, that's helpful. Other than that, one of my question is, could you provide like comparative breakdown of the current landed cost of imported crucibles versus the expected in-house manufacturing cost? And also, what percentage of our total crucible requirements can be met through in-house manufacturing at initial stages?
So, in a range, you can say about what we' ve, we'll be 40% cheaper compared with the import. But here, it's not only about the cost, but it is also about the dependency. And again, when we make a business plan, then for imported crucibles, there are certain amount of working capital which goes up drastically high, which you'll be able to reduce it in a big way. So it's not only the cost of the crucible, but overall the economics of the project which makes it very healthy.
And how much of our in-house requirement will be met via this back integration?
100% of our in-house requirement would be met by the plant. We would require at the peak around 40,000, 45,000 crucibles in-house, and the balance crucibles we will be selling outside, which are in extreme short demand today, because the only producer of crucible again today is China, and we' ll be one of the only companies producing from outside of China.
Okay.
The crucible project actually is a very, very profitable project on its own.
All right. Yeah. Thank you.
Thank you. The next question is from Harshit Chheda from Centra Insights. Mr. Harshit, please go ahead.
Can you hear me?
Sir, again, sir, your voice is a little bit heavy.
Hello, is this better now?
Yes, you can ask. Yes, please.
My first question is, I wanted to obtain a brief understanding about our end-to-end manufacturing process for graphene. What are the key processing stages involved, and how does the manufacturing process work?
The graphene process is not a textbook graphene we make. It's a very customized process, and it involves various chemicals as well as the reactions in that. Unfortunately, we cannot disclose that process outrightly because it's a patented process of our own where we've been working for more than last seven years. Basically, it's a kind of graphite material where we layer out the graphite completely using different methodologies. You can imagine the layer, the graphite material has got millions of layers, and those layers have been trying to be removed where the graphene is finally produced. Again, there are several grades in graphene where the methodology changes. It's a highly technical process, very, very high barriers to entry in this kind of process. That's the reason we can't explain the whole process in a very simple way.
All right. A question on the anode side.
Our process is completely patented. Our process is completely patented.
Have you filed a process patent for it?
Yes.
Okay. My other question is on the anode side. Other than raw coke, what is another raw material that we can use to make graphite anodes?
There can be experiments, but in reality, since we are talking about a large capacity and we are talking about all the class A customers whom we are supplying to, so we are not doing any kind of experimentation in our plant. That is why the focus is very clear that where the, today, 98% of the material made in China is made with this kind of raw material, and we will be doing the same. There will be no new experimentation from the main plant.
All right. And to make anodes, what do we require other than raw coke? Is there any additional material we need to add to it?
There are other materials which are smaller in quantities. For example, there are certain kind of pitch required. There are certain, as you know, there are crucibles required and power. Overall, the number of raw materials required to manufacture anode is very limited. Also, just if I can add to what Ankur is saying, this other thing Ankur is talking about are the basic anodes. As we go forward, when we are working with our customers and if we want to make the absolutely high-end anodes that go into drones, EV, other application, then you' ve silicon-doped anode, graphene-doped anode. We' re actually working with our customers on things like this, which will completely change the entire scenario in terms of sales.
The idea is to, while we sell the regular grade of anode, which will always be sold in large volumes, if we can increase the sales of our specialized anodes, that will add to the top line significantly. There you will be adding stuff like silicon and graphene, et cetera, which constant R&D is going on to and fro with all the customers for that.
Thank you. The next question is from Mr. Kaushal Sharma from Equinox Capital. Participants, please limit your questions to one. Mr. Kaushal, please go ahead.
Hi, sir. Very good afternoon and all people.
Yes.
Yeah.
Yeah. I just want to understand your REPLUS site that you have said that you are concerned about the construction of 5 GWh of new capacity. What amount of CapEx that we have involved in this, and when are we expecting to commercialize this facility, and what kind of revenue potential that we can expect from this and the unit economics in terms of IRR and EBITDA? Could you guide on that?
Mr. Kaushal Sharma, we are not able to understand the question. Can you be a bit clearer, please?
Yeah, so my question is on the REPLUS BESS capacity that you are building of 5 GW additional facility. Could you explain the unit economics in terms of EBITDA or the IRR in this that we' re going to make in this? And what amount of CapEx has we put up in this 5 GW as of now?
Yeah, so the total CapEx which is for to expand the capacity from 1 GW to 6 GW is INR 250 crore. The EBITDA numbers, as it is a very highly competitive market, so it remains in the range of, say, 10% plus-minus 1, 2% kind of. The third question you talked about IRR. So, the IRR business in REPLUS, because say it's a low CapEx, high turnover ratio, so in that case, REPLUS is having a good IRR numbers on an overall basis.
Thank you. The next question is from Mr. Meet Bhuva from Entigrity Ventures. Please go ahead. Please limit your question to one.
Yeah. Hi, am I audible?
Yes, sir, please.
Yeah. I have the question on crucible side. I just wanted to understand what portion of the raw material requirement in the crucible is, and the crucible that we are planning to sell outside, what is the realization and margins on that?
The crucible raw material is basically when we graphitize in our anode business. In the anode, we have the graphitization furnaces. So, the packing media which is used in graphitization, that ultimately becomes the raw material for crucible. So, the raw material is available with us in the natural process of making anode. Secondly, realization, I mean, you can connect with the numbers itself because outside realization is very healthy because while we' re talking about a 30%, 40% saving when we are using it internally, the realization outside again is about 30%, 40% EBITDA margin. So, the realization overall is very healthy in the crucible part.
Thank you. The next question is from Mr. Prakash, a retail investor. Please go ahead.
Hey. Hi. Good afternoon, everyone. I' ve a question regarding, when we put all these things together, how are we looking into the FY 2028 numbers in terms of the top line and margin? If you could give us some kind of indication across business line and the group together.
I take the steady state numbers, which will be FY 2029, 2030 numbers. That will give me a more steady state, both in terms of my anode graphene and my REPLUS numbers, which will be somewhere in the range of, say, INR 500-INR 8,000, INR 8,200 kind of revenue numbers. The EBITDA numbers, we talked about the percentages earlier. So, the average EBITDA at the group level will remain to be in the range of 25%-28%.
Thank you. The next question is from Mr. Ahmed Madha from Unifi Capital. Please go ahead.
Yeah, thanks for the opportunity. Firstly, just to understand the power business, how much units one can assume annually from our two hydropower plant plus one wind plant? About 1,000 million units, is that fair to assume?
Yeah. You see, the normative level, normally we produce about one billion units every year from both the plant. But again, it depends upon the availability of the water and other factors. So, it depends on availability of water, whether we can produce more and less also. But on normative level, you can very well assume about 100 crore unit every year. And out of 100 crore, 50% is going to the government of Himachal for their free power. So, balance is 80% is available for sale.
Understood. Can you give just quarterly sense, assuming the business is seasonal, considering the water availability and skewed towards the first half and Q2? Can you give some sense, generally, not just specific this year, but generally, how is it distributed among four quarters?
75%, 25%.
Between the first half and second half.
First half, we produce 75%, and the second half, we produce 25%.
Understood. Pricing, obviously, the spot pricing have been little favorable, at least in this financial year, the first six months. Is it fair to assume, depending on how the spot prices trend, our profitability will be also in accordance with that?
Yeah. You see, the spot prices are dependent on so many factors in the country. As you know that we' re selling in the Indian Energy Exchange, which deals with only 10% of the power of the total power consumed in this country. It really depends on the monsoon, it depends on the availability of the coal to the thermal power plants. These are the factors which are going to determine, plus the demand of the power in the country overall. What we' ve seen recently, the demand is going up and the supply is going down because of the non-availability of thermal power in the market. Therefore, the prices have firmed up, and our belief is that this trend is going to continue for next couple of years, that's for sure.
I can't say about more than five years or so, but for next five years, we are projecting in the same range what we are selling today, the power is. Another thing is this, we' ve a reservoir for peaking power. On normative level, we produce about 70% non-peak power and 30% peak power. We' re taking the advantage of peaking rates, which is right now going to the top of about INR 10 or INR 9 or something like that.
Understood. So sir, when we generally, we' ve been guiding the investors around INR 300 crore-INR 350 crore EBITDA in the power business, that assumes far lower, maybe INR 5, INR 5.5 pricing compared to probably higher, which you are getting today. Is that fair way to look at it?
Yes, you can see that because since we are operating in a merchant market, so we don't want to be very, very aggressive for next five years. When we' re projecting our number, we go with the reasonable number, of course, on a conservative basis.
Understood, sir. Sir, we had INR 1,000 crore cash on books. I believe because we have now different entities, have we been able to figure out the way to upstream the cash from one subsidiary to other subsidiary? Because our power businesses will have the cash accumulated and will continue to generate incremental cash, but the other entities, other subsidiaries will need that cash flows. Have we been able to figure out a way to upstream the cash and then distribute to our other businesses?
See, we are working on this aspect. As you know that recently we have acquired the 49% stake from Statkraft, and that has been funded by the 50% by the banking community and the 50% by our own company and family office. So, there is that also on one of our subsidiary companies who has acquired the stake. Therefore, we' re working on it, and I would request Puneet to explain more on this.
See, we may evaluate all options, how we can consolidate our entire power business altogether and how we have to utilize the money in the best possible way for the growth of the business. But give us few quarters, we will update you.
We' ve some plans
Thank you, sir.
on the table. We are working on that.
Thank you, sir. We have next question from Mr. Aryan Ranjan. Please go ahead.
Hi, sir. Has there been a restatement in the power segment? I just wanted to know the current PLF factor and revenue realization.
The PLF factor that we've had is around the-
PLF factor, we are working on 43%-44%. Both the projects together. And the pricing, as you know that we are operating in merchant market, every day we are selling at a different price. But certainly this year our price is ranging between INR 6 to INR 6.5.
Thank you. Ladies and gentlemen, we' ll take this as a last question. I now hand the conference over to management for closing comments.
Thank you everyone for joining us today and for your continued interest in HEG Advanced Materials Limited. We' re building a differentiated platform across advanced materials, energy storage solutions, and green power assets, while maintaining a very, very strong focus on disciplined execution and long-term value creation. We remain encouraged by the progress across our three growth initiatives and look forward to updating you on our journey in the quarters ahead.
Overall summary, I mean, we' re looking at a very healthy, steady state EBITDA, as Neha Rajvanshi had mentioned. The theme remains research to revenue, so we are spending a lot of time, money, effort on research, and ultimately it' s all now coming back to us in the form of revenue in the next two or three years. And there is a lot of this thing, a good thing that we' re seeing from the customer offtakes.
Government incentive is something that we' ll be in a position to talk very soon, and that will form a very substantial portion that will add to our ROCEs, which we' re talking about in all the different businesses, in any case, more than 20%-25%, et cetera. When the government subsidies come, I think those should go ahead. Overall, thanks a lot for this call, the first call. We would be happy to have any one-on-one meetings for anyone for further queries. You can get in touch with Neha or the Company Secretary. I would personally want to invite anyone on the call to visit our state-of-the-art R&D facilities where all this magic is happening, because I do believe seeing is believing. Thank you once again, and have a good day.
Thank you, sir. Thank you, participants. On behalf of 360 ONE Capital Market, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.