HEG Limited , a leading graphite electrode manufacturer, has announced significant strategic decisions following its recent board meeting. The company's board has approved two major transactions that could shape its future growth and investment strategy.

Investment in TACC Limited

HEG's board has given the green light for a substantial investment of up to 6.33 billion rupees (approximately $76 million) in unsecured, unlisted optionally convertible debentures (OCDs) of TACC Limited, a wholly-owned subsidiary of HEG. This investment will be made through a Debenture Subscription Agreement, with the OCDs to be issued in one or more tranches.

Key features of the OCD investment include:

• Conversion Option: HEG has the discretion to convert the OCDs into equity shares of TACC Limited at any time before the redemption date.
• Coupon Rate: 0.01% per annum, payable annually, or as mutually agreed upon.
• Redemption: If not converted, the OCDs may be redeemed by TACC Limited on March 31, 2036, or an earlier agreed date, at a premium of 12.50% per annum compounded annually.

The proceeds from this issuance are earmarked for TACC Limited's research and development, business expansion, capital expenditure, working capital requirements, and other general corporate purposes.

Stake Sale in Texnere India Private Limited

In a separate development, HEG's board took note of a decision by its wholly-owned subsidiary, Bhilwara Infotechnology Limited (BIL), to sell its 26% stake in Texnere India Private Limited. This decision follows a previous business transfer agreement and shareholding arrangement. The proposed sale is based on a valuation report from a SEBI-registered Category-I Merchant Banker.

Additional Board Decisions

The board meeting also resulted in several other key decisions:

1. Appointment of New Executive

Shri Puneet Anand has been appointed as President and Group Chief Strategy Officer of HEG Limited, effective December 1, 2025. Anand, who will also serve as a Key Managerial Personnel, brings over 17 years of experience in strategy, transactions, tax, and family-owned enterprises.

2. Regulatory Matters

The board acknowledged receipt of show cause notices from the Office of the Deputy Commissioner (SGST) Mandideep Circle, Bhopal Division-2. These notices, for the tax periods FY 2019-20 and FY 2020-21, propose recovery of IGST refunds along with penalties amounting to 282.34 crore rupees for each tax period. HEG expressed confidence that their IGST refunds are in order and expects the matter to be resolved favorably.

These strategic moves by HEG Limited indicate the company's focus on strengthening its subsidiaries, optimizing its investment portfolio, and enhancing its leadership team. The substantial investment in TACC Limited, in particular, suggests a strong commitment to future growth and expansion in research and development capabilities.

HEG Limited , a leading graphite electrode manufacturer, has reported a substantial increase in its financial performance for the second quarter.

Profit Soars

The company's net profit for the quarter jumped 72.7% to ₹143.00 crore, compared to ₹82.80 crore in the same period last year. This significant growth in profitability underscores HEG's strong market position and operational efficiency.

Revenue Growth

HEG's revenue also saw a notable increase, rising to ₹699.20 crore from ₹567.60 crore year-over-year, marking a 23.2% growth. This uptick in revenue indicates robust demand for the company's products and services.

EBITDA Performance

The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose to ₹118.40 crore from ₹96.30 crore in the previous year, representing a 23.0% increase. This improvement in EBITDA suggests enhanced operational efficiency and cost management.

Stable Operating Margin

Despite the significant growth in revenue and profit, HEG managed to maintain a stable operating margin. The operating margin for the quarter remained flat at 17%, indicating consistent operational performance amid growth.

Financial Highlights

All financial figures are in crore rupees, except for percentages

Corporate Developments

• The board approved subscription to optionally convertible debentures of subsidiary TACC Limited for up to ₹633.00 crore.
• The company noted the proposed sale of a 26% stake in Texnere India Private Limited.
• Puneet Anand was appointed as President and Group Chief Strategy Officer.

Regulatory Matters

HEG received show-cause notices from GST authorities regarding IGST refunds for FY 2019-20 and FY 2020-21, with proposed penalties of ₹282.34 crore for each period. The company expressed confidence that the refunds are in order and expects the notices to be dropped.

Market Performance

HEG's shares closed at ₹519.65, down 5.39%.

The company's impressive financial results reflect its strong market position in the graphite electrode industry and its ability to capitalize on favorable market conditions. HEG's substantial profit growth, coupled with revenue expansion and stable margins, positions it well for continued success.

Investors and industry observers will likely keep a close watch on HEG's performance in the future, particularly in light of its ability to maintain profitability and operational efficiency during a period of significant growth, as well as its response to the regulatory challenges posed by the GST notices.