Chinese Checkers

China’s crackdown on polluting steel plants helped Heg’s graphite electrode business grow more than nine times.

- Dipak Mondal

WHEN CHINA DECIDED to crack down on some of its most polluting industries in 2017, which also included many blast and induction furnace steel plants, steel export from the world’s largest producer halved. This benefitted not just the steel manufacturers in other countries, but also manufacturers of graphite electrode, which is primarily used in the steel industry. Interestingly, there are only five such manufacturers globally, two being from India. The two Japanese firms control 54 per cent of the global market, the US company controls about 23 per cent and the two Indian companies together control another 23 per cent.

HEG, one of the Indian manufacturers (other being Graphite India), has reaped the benefits of a sudden change in the complex business dynamics of the industry. The company’s sales jumped from 860 crore in 2016/17 to 2,750 crore in 2017/18. And it expects the momentum to continue. Ravi Jhunjhunwala, CMD and CEO of HEG, says they expect the revenue in the current financial year (2018/19) to touch 6,000 crore.

The management has reason enough to be confident. In the first quarter of the current financial year, net sales of HEG were 1,587 crore, 7.5 times the sales of 213 crore in the corresponding quarter last year. The spurt in sales in 2017/18 saw the company posting a profit (1,081 crore) after two continuous years of losses (50 crore in 2016/17).