The Hindu Business Line : HEG eyes Rs 1,200-crore turnover this fiscal

New Delhi May 19 Graphite electrode manufacturer HEG Ltd is expecting an increase of over 25 per cent in the company's turnover during the current fiscal over fiscal 2006-07, along with commensurate increase in profit.

The Chief Executive Officer of the company, Mr Ramesh C. Surana, told Business Line, "In 2006-07, the turnover was approximately around Rs 950 crore which we expect to go up to Rs 1,200 crore for fiscal 2007-08."

"Increase in the company's production capacity as well as increase in product prices would together contribute to the improved performance during the current fiscal," he said.

Expansion Plan

Graphite electrodes are used in steel making through the electric arc furnace route and in ladle furnaces when steel is made through the blast furnace route.

"We had undertaken a Rs 450-crore expansion plan and increased capacity from 30,000 tonnes to the present 52,000 tonnes per annum, the benefit of which would be realised during the current fiscal. Also, since steel prices are increasing, steel companies would not find it difficult to absorb the increase in prices of graphite electrodes, which account for 3 per cent of the cost of steel making," Mr Surana said.

Profitability growth

He also pointed out that the growth in profitability would be more on account of higher production as the company is also facing a severe increase in raw material costs, which are fully imported.

HEG uses calcinated petroleum coke (CPC), a petroleum refinery by-product, as the main source of carbon. This is purified and eventually blended with pitch made out of coal tar, which is a by-product of coke oven batteries in steel plants.

The company sources its entire requirement of CPC from firms such as Conoco Phillips (erstwhile Phillips Carbon), Sedriff Coke and other smaller suppliers.

The price of CPC has increased exponentially over the past three years as it is a sellers' market, with very few refineries having the high carbon containing CPC suitable for graphitisation, he said.

"CPC prices were $550 per tonne three years ago and currently stand at around $1,350 per tonne. As a result, efforts are on to develop technologies to benefit the lower grades of raw petroleum coke (from which CPC is made) such as the ones produced in Indian refineries so that they could be converted to 99.5 per cent pure CPC," Mr Surana said, adding that the results of the ongoing R&D efforts are expected to be visible over the next two to three years.