PROUD TO BE INDIAN PRIVILEGED TO BE GLOBAL

HEGSECTT2018 23rd November 2018

1 ESE Limited 2 National Stock Exchange of India Limited 25th Floor P JTowers Exchange Plaza 5th Floor Dalal Street Plot NoCl G Block Bandra - Kurla Complex MUMBAI - 400 001 Bandra (E) Scrip Code 509631 MUMBAI - 400 051

Scrip Code HEG

Reg Intimation of Schedule of Analyst I Institutional Investor Meeting and a Presentation to be made at the Investors meet under the SEEI (Listing Obligations and Disclosure Requirements) Regulations 2015

Dear Sirs

Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 we wish to inform you that Senior Management of the Company is scheduled to meet Analysts I Investors from 29th November 2018 to 30th November 2018 at Hongkong as organized by Bank of America Merill Lynch

The schedule is subject to changes due to any exigencies on behalf of the Investors or the Company

We would like to inform further that the presentation to be made in the aforesaid meeting is attached herewith for your reference

The same is also being uploaded on the Company website ie wwwhegltdcom

We request you to kindly take the same on record

Thanking you

Yours faithfully For H EG Limited

heginvestorlnjbhilwaracom

Encl as above

HEG LIMITED Corporate Office Regd Office

Bhilwara Towers A-12 Sector-1 Mandideep (Near Bhopal) Distt Raisen - 462046 Noida shy 201 301 (NCR-Delhi) India (Madhya Pradesh) India

Tel +91-120-4390300 (EPABX) Tel +91-7480-405500 233524 to 233527 Fax +91-120-4277841 Fax +91-7480-233522

Website wwwlnjbhilwaracom Website wwwhegltdcom

Corporate Identification No L23109MP1972PLC008290 1

0 April 2018

November 2018 Investor Presentation

2

1

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

Textiles Graphite Electrodes

Power Generation amp

Power Consultancy IT Enabled Services

3

2

Nationwide Presence

Listed Companies

bull HEG Limited

bull RSWM Limited

bull Maral Overseas Limited

bull BSL Limited

bull BTTL Limited

Plants amp Office Locations

bull Group has 5 of its companies listed on Indian Stock

Exchanges with over one million stakeholders

bull Corporate office amp Production units at 37 locations

with over 25000 workforce

LNJ Group - Key Financials 2017-18

Turnover USD 1242 mn

Net Fixed Assets USD 673 mn

Networth USD 894 mn

EBITDA USD 382 mn

4

3

Worldrsquos Largest Single Site Graphite Electrode Plant ndash 80000 MT per annum

5

4 4

Highlights

bull 1977 - Established in Financial (appx 25 equity) Technical

participation of Pechiney France

bull 1992 - Pechiney sold their Graphite business to SGL Germany

amp Indian Promoters bought these shares in HEG

bull 1995 2011 ndash Kept expanding from 10000 mt in small tranches

amp in 2011 took a quantum leap from 60000 to 80000 mt

bull Single largest Graphite plant in the world under one roof

bull Consistently exporting appx 65-70 of production to more than

30 countries and to more than 100 customers around the world

incl ArcelorMittal Nucor Posco Tata Sail Jindals Sabic

Gerdau Ferroatlantica Celsa etc

bull Possibility to expand to 100000 mt in 18-24 months at a small

investment

6

5

Graphite Electrode (GE) Industry ndash Our Unique Strengths

bull GE- An indispensable material for Electric Arc Furnaces (EAF) for

Steel production

bull EAF accounts for appx 45 of total World Steel Production (Without

China)

bull High Entry Barrier ndash HEG the last new entrant in the world -1977

bull Uses 100 Captive Power

bull State of the art manufacturing facility ndash due to constant expansions

amp investments

bull Capable of producing 100 UHP Electrodes

bull Facilities suitable for manufacturing up to 32rdquo electrodes

7

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

1

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

Textiles Graphite Electrodes

Power Generation amp

Power Consultancy IT Enabled Services

3

2

Nationwide Presence

Listed Companies

bull HEG Limited

bull RSWM Limited

bull Maral Overseas Limited

bull BSL Limited

bull BTTL Limited

Plants amp Office Locations

bull Group has 5 of its companies listed on Indian Stock

Exchanges with over one million stakeholders

bull Corporate office amp Production units at 37 locations

with over 25000 workforce

LNJ Group - Key Financials 2017-18

Turnover USD 1242 mn

Net Fixed Assets USD 673 mn

Networth USD 894 mn

EBITDA USD 382 mn

4

3

Worldrsquos Largest Single Site Graphite Electrode Plant ndash 80000 MT per annum

5

4 4

Highlights

bull 1977 - Established in Financial (appx 25 equity) Technical

participation of Pechiney France

bull 1992 - Pechiney sold their Graphite business to SGL Germany

amp Indian Promoters bought these shares in HEG

bull 1995 2011 ndash Kept expanding from 10000 mt in small tranches

amp in 2011 took a quantum leap from 60000 to 80000 mt

bull Single largest Graphite plant in the world under one roof

bull Consistently exporting appx 65-70 of production to more than

30 countries and to more than 100 customers around the world

incl ArcelorMittal Nucor Posco Tata Sail Jindals Sabic

Gerdau Ferroatlantica Celsa etc

bull Possibility to expand to 100000 mt in 18-24 months at a small

investment

6

5

Graphite Electrode (GE) Industry ndash Our Unique Strengths

bull GE- An indispensable material for Electric Arc Furnaces (EAF) for

Steel production

bull EAF accounts for appx 45 of total World Steel Production (Without

China)

bull High Entry Barrier ndash HEG the last new entrant in the world -1977

bull Uses 100 Captive Power

bull State of the art manufacturing facility ndash due to constant expansions

amp investments

bull Capable of producing 100 UHP Electrodes

bull Facilities suitable for manufacturing up to 32rdquo electrodes

7

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

2

Nationwide Presence

Listed Companies

bull HEG Limited

bull RSWM Limited

bull Maral Overseas Limited

bull BSL Limited

bull BTTL Limited

Plants amp Office Locations

bull Group has 5 of its companies listed on Indian Stock

Exchanges with over one million stakeholders

bull Corporate office amp Production units at 37 locations

with over 25000 workforce

LNJ Group - Key Financials 2017-18

Turnover USD 1242 mn

Net Fixed Assets USD 673 mn

Networth USD 894 mn

EBITDA USD 382 mn

4

3

Worldrsquos Largest Single Site Graphite Electrode Plant ndash 80000 MT per annum

5

4 4

Highlights

bull 1977 - Established in Financial (appx 25 equity) Technical

participation of Pechiney France

bull 1992 - Pechiney sold their Graphite business to SGL Germany

amp Indian Promoters bought these shares in HEG

bull 1995 2011 ndash Kept expanding from 10000 mt in small tranches

amp in 2011 took a quantum leap from 60000 to 80000 mt

bull Single largest Graphite plant in the world under one roof

bull Consistently exporting appx 65-70 of production to more than

30 countries and to more than 100 customers around the world

incl ArcelorMittal Nucor Posco Tata Sail Jindals Sabic

Gerdau Ferroatlantica Celsa etc

bull Possibility to expand to 100000 mt in 18-24 months at a small

investment

6

5

Graphite Electrode (GE) Industry ndash Our Unique Strengths

bull GE- An indispensable material for Electric Arc Furnaces (EAF) for

Steel production

bull EAF accounts for appx 45 of total World Steel Production (Without

China)

bull High Entry Barrier ndash HEG the last new entrant in the world -1977

bull Uses 100 Captive Power

bull State of the art manufacturing facility ndash due to constant expansions

amp investments

bull Capable of producing 100 UHP Electrodes

bull Facilities suitable for manufacturing up to 32rdquo electrodes

7

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

3

Worldrsquos Largest Single Site Graphite Electrode Plant ndash 80000 MT per annum

5

4 4

Highlights

bull 1977 - Established in Financial (appx 25 equity) Technical

participation of Pechiney France

bull 1992 - Pechiney sold their Graphite business to SGL Germany

amp Indian Promoters bought these shares in HEG

bull 1995 2011 ndash Kept expanding from 10000 mt in small tranches

amp in 2011 took a quantum leap from 60000 to 80000 mt

bull Single largest Graphite plant in the world under one roof

bull Consistently exporting appx 65-70 of production to more than

30 countries and to more than 100 customers around the world

incl ArcelorMittal Nucor Posco Tata Sail Jindals Sabic

Gerdau Ferroatlantica Celsa etc

bull Possibility to expand to 100000 mt in 18-24 months at a small

investment

6

5

Graphite Electrode (GE) Industry ndash Our Unique Strengths

bull GE- An indispensable material for Electric Arc Furnaces (EAF) for

Steel production

bull EAF accounts for appx 45 of total World Steel Production (Without

China)

bull High Entry Barrier ndash HEG the last new entrant in the world -1977

bull Uses 100 Captive Power

bull State of the art manufacturing facility ndash due to constant expansions

amp investments

bull Capable of producing 100 UHP Electrodes

bull Facilities suitable for manufacturing up to 32rdquo electrodes

7

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

4 4

Highlights

bull 1977 - Established in Financial (appx 25 equity) Technical

participation of Pechiney France

bull 1992 - Pechiney sold their Graphite business to SGL Germany

amp Indian Promoters bought these shares in HEG

bull 1995 2011 ndash Kept expanding from 10000 mt in small tranches

amp in 2011 took a quantum leap from 60000 to 80000 mt

bull Single largest Graphite plant in the world under one roof

bull Consistently exporting appx 65-70 of production to more than

30 countries and to more than 100 customers around the world

incl ArcelorMittal Nucor Posco Tata Sail Jindals Sabic

Gerdau Ferroatlantica Celsa etc

bull Possibility to expand to 100000 mt in 18-24 months at a small

investment

6

5

Graphite Electrode (GE) Industry ndash Our Unique Strengths

bull GE- An indispensable material for Electric Arc Furnaces (EAF) for

Steel production

bull EAF accounts for appx 45 of total World Steel Production (Without

China)

bull High Entry Barrier ndash HEG the last new entrant in the world -1977

bull Uses 100 Captive Power

bull State of the art manufacturing facility ndash due to constant expansions

amp investments

bull Capable of producing 100 UHP Electrodes

bull Facilities suitable for manufacturing up to 32rdquo electrodes

7

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

5

Graphite Electrode (GE) Industry ndash Our Unique Strengths

bull GE- An indispensable material for Electric Arc Furnaces (EAF) for

Steel production

bull EAF accounts for appx 45 of total World Steel Production (Without

China)

bull High Entry Barrier ndash HEG the last new entrant in the world -1977

bull Uses 100 Captive Power

bull State of the art manufacturing facility ndash due to constant expansions

amp investments

bull Capable of producing 100 UHP Electrodes

bull Facilities suitable for manufacturing up to 32rdquo electrodes

7

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

6

bull RampD set up to corroborate the

Quality amp Improvement Drives

with small scale production

facilities

bull The focus is also on development

of new product lines

bull Development is focused towards

Carbon

RampD Center

8

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

7

Capacity Build Up

100

80

66

52

30

14

0

20

40

60

80

100

120

2009 1990 2006 2002 2011 2020

777777

44

14

0

20

40

60

80

100

120

2002 2006 2020 2009 2011

Graphite Electrode (In 000 tonne)

Captive Power (MW) (In 000 tonne)

Probable

9

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

8

EAF Steel

10

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

9

Global EAF steel production

0

100

200

300

400

500

2012

2006

1993

1997

2001

1989

1998

2003

2004

1990

1988

1992

2005

2008

2009

1987

1994

2002

1999

1991

1995

2011

2000

2018

2017

-2

8-10

1996

2013

2014

2015

2016

2010

2007

35

1984

1986

1985

Source WSA

bull EAF steel production grew at the CAGR of 35 from 1984-2011

bull Due to financial meltdown in 2009 and sudden surge of large BOF capacity built in China between 2010-15 EAF

steel production dropped at the CAGR of 2 amp now started to grow at the rate of about 8-10 from 2016 onwards

11

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

10

EAF World Production ndashWithout China amp China

Source WSA

Figures in mmt 66 71 65 57 54 47 52 75

100

160 175

353 373 366 301 356

383 383 372 380 360 366

398 415

432 449

9

2011

12

2009 2006 2020 2013 2018(P) 2012 2010 2007 2008 2014

6

2015

6

2016 2017

20 21

2022

+11

134 China EAF EAF World wo China of EAF China

The estimates between 2018 amp 2022 are taken at growth rate of 3 per annum for rest of the world Additional EAF capacity of 110 mmt between 2016 and 2020 would mean an additional demand of appx 275000 mt of GE in China Which may further go

upto 310000 mt by 2022 There could be a window of opportunity for companies like us to export electrodes to china in this period as new electrode capacities in china would take

longer time to come up than steel capacity 12

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

11 HEG Ltd copy LNJ Bhilwara Group

This year the application of the restriction will be more rigid amp strict amp have been

advanced from 1 Oct to 31 Mar compared to 15 Oct to 15 Mar last year

Export of Steel is likely to keep falling in near future

China likely to add around 200 million tons scrap per annum for the next few

years

In order to discourage export of scrap they have imposed a 40 export duty

Central Government has given limits on Environment and if limits are breached

Governors will be removed

50 of Chinese steel is produced within 700-800 kms radius of Beijing

Blue Sky Policy

Chinese Government is taking air pollution control measures seriously

13

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

12 HEG Ltd copy LNJ Bhilwara Group

China is in the fifth year of a ldquowar on pollutionrdquo

2017 environment control was not very serious ndash being first year allowed 60-

65 capacity utilization against 50 orders but this year it will be much more

stringent amp the impact may be higher

Last year Environmental Policy affected 28 cities within China this year more

than 80 cities may be affected

EAF carbon emissions is 86 less than BOF gas amp 72 less than BOF solid gas

Chinarsquos Hebei Province Gets Tough on Steel Mills to Meet Low Emissions

Targets until 31 Octrsquo18 in case of failure to meet the targets companies will be

ordered to shut down

Two Chinese Cities of Hebei Province Set to Observe 50 Production Cuts

during Winter Heating Season

China Pollution Crack Down

14

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

13

Chinarsquos Steel Capacity outlook 2018

bull Capacity reduction ahead of expectations net capacity reduction

achieved 115 mmt vs 150 mmt target The balance is expected

to close down in this year

bull Additional ~155 mmt illegal induction furnace capacity closed

bull Many of these is being replaced by new electric arc furnaces

bull 105 new EAFs with capacity of 66 mmt have been installed or

commenced construction in China in 2017

bull Steel replacement policy in favour of EAF v BF New measure

requires capacity replacement in Beijing and 6 other provinces to

keep the ratio at 1251 level or more For other regions the ratio

become higher than 11 effectively reducing steel capacity

bull As per CISA China steel capacity to be brought below 1 bn mt

by 2025

IFs capacity closure in Major Regions

Source ndash WSA 15

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

14 HEG Ltd copy LNJ Bhilwara Group

74

58

76

65

70

68

70

65

51

50

47

49

57

65

69

69

58

59

60

May

Jan

Feb

Apr

Mar

Jun

Aug

Jul

Sep

Oct

CY17

CY 18

Monthly Chinese Exports in MnT

Chinese Steel Exports Further Down 11 Y-o-Y Jan-Seprsquo18

CY-14

112

CY-17 CY-15 CY-16 CY-18 (e)

70

93

108

76

China Steel Exports

(MT)

Annualized based on 8 months actuals

16

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

15

Chinese Steel Exports

10801120 120

100

20

0

50

80

40

60

40

30

20

10

00

MT

CY17

756

CY16 CY15 CY14

930

EU (28) Africa Middle-East World USA India

Fall of gt50 in

most geographies

from CY15 levels

bull In Jan-Sep 2018 it further fell down to annualized 70 million tons

Exhibit 1 Chinese steel exports have fallen sharply in CY17

Source Bloomberg Centrum Research 17

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

16 16

Conclusion on EAF Steel

EAF Steel production is expected to grow at a faster

pace compared to BOF because of following reasons

bull Replacement of Induction furnaces amp polluting blast

furnaces in China by EAFs

bull EAF Share in China to grow from 6 in 2016 to 20 in

2020

bull Chinese scrap availability to increase at the CAGR of 4

(approx 200 million tons scrap per annum) for the next

20-25 years facilitating growth of EAF

bull Continuous increase in share of EAF in rest of the world

due to pollution concerns on BOF and less capital

intensive nature of EAFs

bull As Chinarsquos steel exports keep dropping the Rest of the

World Steel production keeps increasing where EAF

accounts for 45 of Steel Production

18

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

17

Graphite Electrode (GE) Industry

19

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

18

Industry Overview ndash Indiarsquos Rising Share (wo China amp Russia)

0

20

40

60

33

14

30

3

23

32 32

23

54

0

26

Graftech SGL Japan

32

India

2010 1990 2017

20

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

19

GE Capacity Evolution (wo China amp Russia)

S No Company Name 2010 2014 2017 No of plants

1 SDK 105 105 225 5

2 Tokai 100 100 95 4

3 NCK SEC 60 60 60 2

Sub-Total Japan (A) 265 265 380 11

4 Graftech 245 185 167 3

5 SGL 230 180 0 0

Sub-Total USEurope (B) 475 365 167 3

Sub-Total ( A + B ) 740 630 547 14

6 HEG 60 80 80 1

7 GIL 60 98 98 4

Sub-Total India (C) 120 178 178 5

Grand Total 860 808 725 19

Total of 7 plants closed between 2010 amp 2016 in USA Canada Brazil Germany Italy amp South Africa 21

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

20

GE Industry Development

7 GE plants got closed

between 2010 and 2016 20

of world capacity due to

demand supply imbalance

Currently 19 plants in 15

countries comprising 725000

tons capacity are working at

85-90 capacity utilization amp

are unable to cope with the

additional demand due to rise

in EAF steel production

causing shooting up of GE

prices

Almost 300000 tons of

inefficientpolluting GE

capacity in China has been

shut down thereby causing

shortage of GE within China amp

reduction of Chinese exports

further contributing to price

rise of GE

22

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

21 21

Needle Coke Scenario

bull Needle coke is the main raw material for GE production amp is very critical

for the growth of GE industry

bull Due to excess capacity of needle coke in the recent past some of the

needle coke producers have been trying to find a new application for coke

in the Lithium Ion batteries

bull In the last couple of years needle coke has been successfully used in this

application and a reasonably large part of needle coke is now being used in

China in Lithium Ion batteries

bull With the sudden increase in demand of GE needle coke availability has

become a bottleneck

bull All Global GE manufacturers are not able to operate beyond 85-90 capacity

utilization

bull One of the largest producers of needle coke is debottlenecking its capacity

enabling them to increase its production by around 50-60000 mt

bull This is likely to be on stream in the 2nd half of 2018 and should help the

Graphite Industry to some extend for short term Q4 2018 onwards

23

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

22

Financial Snapshot

Jul-Sep 2018 (Quarterly)

Apr-Jun 2018 (Quarterly)

Jul-Sep 2017 (Quarterly)

Aprrsquo17-Marrsquo18 (Annually)

REVENUE 1794 1587 410 2758

EBITDA 1389 1197 192 1734

EBITDA Margin 7657 75 4666 63

EBIT 1371 1180 174 1661

EBIT Margin 76 74 43 60

PAT 889 770 114 1081

PAT Margin 50 49 28 39

EPS 22245 19277 2844 27061

in Rs Crore (except EPS)

EBITDA includes Other Income

24

23

Thank You

25

23

Thank You

25