HEG Limited , a leading graphite electrode manufacturer, has received a significant reprieve as the tax authority has concluded its efforts to recover ₹2.82 billion from the company. This development, coupled with the company's recent board decisions, marks a positive turn for HEG's operations and future outlook.

Tax Recovery Effort Dropped

The Office of the Deputy Commissioner (SGST) Mandideep Circle, Bhopal Division-2 has dropped the show cause notice issued against HEG Limited for the tax period April 2018 to March 2019. The notice had initially proposed the recovery of allegedly erroneous IGST refunds along with penalties amounting to ₹282.34 crores. This decision effectively removes a substantial financial uncertainty that had been hanging over the company.

Capacity Expansion Approved

In a strategic move to strengthen its market position, HEG's Board of Directors has approved an expansion plan for graphite electrodes and related products. The key details of the expansion are as follows:

• Current Capacity: 100,000 TPA (Tonnes Per Annum)
• Proposed Capacity Addition: 15,000 TPA
• Implementation Period: 30 Months
• Estimated Investment: Approximately ₹650 Crores
• Financing: Through internal accruals and debt, if required

The company cited structural changes in the industry, boosting demand for electrodes, and expectations of healthy payback as the rationale behind this expansion.

Financial Performance

HEG reported the following consolidated financial results:

The company has shown a remarkable improvement in its profitability, with profit after tax increasing by over 350% compared to the same quarter in the previous year.

Management Commentary

Ravi Jhunjhunwala, Chairman, Managing Director & CEO of HEG Limited, stated, "The board's decision to expand our production capacity reflects our confidence in the growing demand for graphite electrodes. This investment will position HEG to capitalize on the structural changes we're observing in the industry."

He added, "The resolution of the tax matter is a positive development that removes a significant contingent liability from our books. We can now focus more intently on our core business and expansion plans."

The company's strategic decisions and improved financial performance indicate a positive outlook for HEG Limited, as it aims to strengthen its position in the graphite electrode market while resolving past regulatory challenges.

Investors and stakeholders will likely watch closely how these developments translate into long-term value creation for the company.

HEG Limited , a leading graphite electrode manufacturer, has received a significant reprieve as the tax authority has concluded its efforts to recover ₹2.82 billion from the company. This development, coupled with the company's announcement of a capacity expansion plan, marks a positive turn for HEG's operations and financial outlook.

Tax Recovery Effort Dropped

The Office of the Deputy Commissioner (SGST) Mandideep Circle, Bhopal Division-2 has dropped the show cause notice issued against HEG Limited for the tax period April 2018 to March 2019. The notice had initially proposed the recovery of allegedly erroneous IGST refunds along with penalties amounting to ₹282.34 crores.

In a disclosure to the stock exchanges, HEG stated, "The show cause notice earlier issued by Office of the Deputy Commissioner (SGST) Mandideep Circle, Bhopal Division-2 against the Company for the tax period April 2018 to March 2019, proposing for recovery of the erroneous IGST refunds along with penalty amounting to ₹282.34 Crores, have now been dropped by GST authority vide their letter dated July 30, 2025."

This resolution eliminates a significant financial uncertainty for the company and is expected to have a positive impact on investor sentiment.

Capacity Expansion Plans

In a separate announcement, HEG's Board of Directors has approved an expansion plan for its Graphite Electrodes and related products. The key details of the expansion are as follows:

The company cited two main reasons for this expansion:

1. Structural changes in the industry, boosting demand for electrodes
2. Healthy payback expectations

This capacity addition represents a 15% increase over the current capacity and is expected to strengthen HEG's market position in the graphite electrode industry.

Financial Performance

For the quarter ended June 30, 2025, HEG reported the following consolidated financial results:

• Revenue from operations: ₹616.93 crores
• Profit before tax: ₹127.46 crores
• Profit after tax: ₹104.83 crores

The company's performance shows a significant improvement compared to the same quarter in the previous year, reflecting a robust demand for its products.

Conclusion

The dropping of the tax recovery effort by the GST authority removes a major financial overhang for HEG Limited. Coupled with the announced capacity expansion plans, these developments position the company for potential growth in the coming years. Investors and industry observers will likely watch closely how these positive developments translate into HEG's future financial performance and market position in the graphite electrode sector.