HEG to invest Rs 400 crore in Bhopal unit

Firm to double capacity by oct 2005

HEG's graphite electrode manufacturing unit at Mandideep near Bhopal will double its capacity by October 2005 with an investment of nearly Rs 400 crore.

After the expansion, HEG's capacity will go up from 32,000 tonnes per year to 60,000 tonnes, making it the world's largest graphite electrode manufacturing unit, on a par with Ucal Graphtek's plant in Mexico.

"Our expansion is part of our plans to become a global player with a worldwide marketshare of 10 per cent in the coming years," said Jacob Mani, vice-president, HEG.

HEG has set up a 13-MW hydroelectric power plant at Tawa in Hoshangabad with an investment of Rs 68 crore, and a sponge iron plant at Durg in Chhattisgarh. It also has a 30-MW thermal power plant in Mandideep. The company is part of the Rs 1,700-crore LNJ Bhilwara group. HEG had a turnover of Rs 500 crore in 2003-04, with a net profit of Rs 51 crore.

Graphite electrodes are used in the production of steel, and with the demand for steel increasing the world over, HEG is anticipating the global demand for graphite electrodes to go up too. The world market for graphite electrodes is estimated to be close to 800,000 tonnes, and globally, except China, there have been no capacity additions in the last two years.

"It is the best time for us to increase capacity. Companies in the developed countries are finding it difficult to expand graphite production because of the Kyoto protocol, which restricts the emission of greenhouse gases," Mani said.

Factors like the reduction in the cost of capital and the cost of power, which account for 32 per cent of HEG's expenses, had helped in the expansion plans, he added. Exports account for nearly 80 per cent of HEG's production in Bhopal.

According to Mani, the Bhopal plant employs nearly 1,000 workers and the company does not intend to increase the workforce despite doubling its capacity. "We have also invested significantly in automating our systems in processes to keep the employee cost low," he said.

Recently a consortium of three companies""HEG, Irasco of Italy, and Iranian firm Iritech""has won a Rs 1,200-crore project in Iran to set up a graphite electrode plant with a capacity of 30,000 tonnes.

The firm has shown interest in setting up hydel power projects at three sites identified by the Narmada Valley Development Authority, in Handia, Boras, and Hoshangabad. Company chief Ravi Jhunjhunwala had a meeting with former chief minister Uma Bharti regarding this.

However, according to official sources, the government has also asked the Narmada Hydroelectric Development Corporation (NHDC), a joint venture of the Madhya Pradesh government and the National Hydroelectric Power Corporation, to complete the pre-feasibility report (PFR) of the proposed projects.