HEG Advanced Materials has allocated approximately 550 billion rupees for capital expenditure to develop its business following the asset separation process. The main area of growth is synthetic graphite anode materials, as the company aims to meet the demand from electric vehicle and energy storage system manufacturers.
According to the plans, the production capacity of anode materials will increase from an initial 20,000 tonnes to 60,000 tonnes by the financial year 2032. Furthermore, the company also plans to expand its areas related to battery solutions and green energy production. The anode business will receive the largest share of the planned investments.
Ridgesh Jundhunjwala, Chairman, Managing Director, and CEO of HEG Advanced Materials, told Business Standard that the purpose of the split is to unlock value, provide investors with focused access to each line of business, and enhance shareholder value. He also noted that the separated entities will gain greater flexibility in financing and the ability to concentrate on core businesses.
The funding for the 550 billion rupee capital expenditure will be sourced from approximately 150 billion rupees of equity and 400 billion rupees of debt, resulting in a ratio of approximately 27:73. The company aims to achieve stable returns by the financial year 2030 with a Return on Capital Employed (ROCE) of about 17 percent.
The immediate priority is bringing the anode business to commercial scale. The first phase, with a capacity of 20,000 tonnes, is under construction, with production scheduled to begin in the first quarter of the financial year 2028. Engineering work is complete, and procurement is 85% done; subsequently, the facility can be expanded to 30,000 tonnes.
Additionally, in Mandidip, Madhya Pradesh, the company has been operating a 200-tonne demonstration unit for the past twelve months. Samples from this unit have already qualified with global cell manufacturers. Ultimately, the company intends to increase anode capacity to 60,000 tonnes by the financial year 2032 to become one of the largest global players outside of China.
Jundhunjwala identified the anode business as the key growth driver for Advanced Materials. HEG forecasts that the domestic Indian cell production volume will reach approximately 250 GWh by 2035, and the demand for graphite anodes will exceed 100,000 tonnes by 2030, driven by electric vehicles and energy storage demand in batteries. He also considers synthetic graphite the preferred choice for fast-charging applications.
The expansion is not limited to battery materials. The Replus company has a battery solution capacity of 1 GWh and plans to increase it to 6 GWh by the second half of the financial year 2027. A 5 GWh line is currently under construction, with certification slated for the fourth quarter of the financial year 2027.
Green energy generation capacity is planned to increase from 292 MW in the financial year 2026 to 680 MW by the financial year 2028. Among the projects under development are a 200 MWh battery energy storage project in Gujarat, scheduled for the third quarter of the financial year 2027, and a 300 MWp solar project in Chhattisgarh, scheduled for the second quarter of the financial year 2028.
The company is also involved in creating a graphene production business with a capacity of 150 tonnes, aimed at use in road infrastructure, textiles, paints and coatings, as well as in graphene anodes, lubricants, and data centers.
The investment program will be partially supported by cash flows generated from green energy operations. Jundhunjwala emphasized that the company's strong equity capitalization is complemented by stable cash flows from the hydro business, which self-funds the roadmap for anodes and graphene.
The split occurred after the Bench Indore Tribunal under the Companies Act sanctioned the composite settlement scheme in August. This approval followed preliminary approvals from the boards of directors and shareholders, as well as obtaining irrevocable consents from BSE and NSE. The scheme came into effect on September 1, and September 7 was set as the record date. The existing public company HEG Limited was renamed HEG Advanced Materials Limited on September 2, retaining the advanced materials, battery solutions, and green energy businesses. Bhilwara Energy Limited was also included in it.
The graphite electrode business moved to HEG Graphite Limited, which is planned to be renamed HEG Limited and is expected to be listed on BSE and NSE in the second half of October. Shareholders will receive one share in the graphite company for every share they hold in HEG Advanced Materials as of the record date.
What is the plan for the graphite business?
Meanwhile, the graphite business plans to increase electrode capacity from 100,000 tonnes in the financial year 2026 to 115,000 tonnes by the financial year 2029. It possesses its own thermal power capacity of 66 MW and hydropower capacity of 13.5 MW, and holds a strategic stake of 9.98 percent in GrafTech USA.
The split also provides both entities with the ability to make independent capital allocation decisions and potentially pursue different inorganic growth opportunities. Jundhunjwala concluded that the main advantage is financing flexibility: after the split, each entity will be able to independently raise capital to fund its own growth. According to him, the post-split structure will provide each company with a 'clean platform for future acquisitions and partnerships.'