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Directors Report of HEG Ltd.

Mar 31, 2015

Dear Members,

The Directors have the pleasure of presenting their 43rd Annual Report and audited statements of accounts for the year ended 31st March, 2015.

(Rs. in crore)

1. (i) FINANCIAL RESULTS 2014-15 2013-14

Net sales 1234.63 1458.91

other operating income 5.89 7.90

total income from operations (net) 1240.52 1466.81

other income 11.55 21.77

Total income 1252.06 1488.58

profit before exceptional items, finance cost, depreciation and amortisation 207.61 267.76

Exceptional items (22.18) (25.36)

Profit before finance cost, depreciation and amortisation 185.44 242.40

Finance cost 65.76 72.30

Profit before depreciation and amortisation 119.67 170.10

Depreciation and amortisation 75.36 72.66

profit before tax 44.32 97.44

Provision for taxation:-

Current year 5.32 10.65

Income tax for earlier years - 0.17

net profit for the period 39.00 86.62

EPS (Basic) Rs. 9.76 21.68

(ii) Appropriations

Amount available for appropriation 457.80 455.51

Dividend :

a) on Equity Shares

Proposed dividend 11.99 23.98

b) Dividend distribution tax

on proposed dividend 2.40 4.07

Transfer to:

General reserve 3.90 8.66

Balance carried forward 439.52 418.80

2. OVERALL PERFORMANCE

The Company recorded net sales of Rs.1234.63 crore during the financial year 2014-15 as compared to Rs.1458.91 crore in the previous financial year. The Net profit during the financial year 2014-15 was at Rs.39.00 crore as compared to Rs.86.62 crore in financial year 2013-14 translating to basic earning per share at Rs.9.76 for the financial year 2014-15 as against Rs.21.68 in financial year 2013-14.

3. STATE OF COMPANY'S AFFAiRS

The analytical review of the Company's performance and its businesses, including initiatives in the areas of Human Resources and Corporate Social Responsibility have been presented in the section of Management Discussion and Analysis of this Annual Report.

Graphite Electrodes

The year under review was one of the most challenging years for the Company, as the Graphite Electrode industry saw erosion in margins. The Company by reformulating its operational management discipline, was able to reduce the effect of declining margins.

The major initiatives during financial year 2014-15 were undertaken to usher in qualitative improvement. A keen emphasis was laid on optimising costs across all operational and commercial areas. Company's focus on reducing working capital continued to show improvements in the level of plant inventories, receivables and other current assets, thereby releasing cash for productive purposes.

Graphite Electrode segment has become increasingly challenging, reflected by weakness in demand. Journey on reducing working capital, cost reduction and reduced debt position, adds strength to the Company in times like these and will reap the first mover benefit, as the tide turns favourable.

power Generation

Power Generation comprises of facilities, which are primarily run for meeting captive requirement of manufacturing graphite electrodes and in the process, also sells surplus power in the open market.

The power segment went through a challenging phase and the Company continues to utilise bulk of the power generated for captive purposes. Hydro power generation was also lower due to insufficient rains in the region.

Reduced operating levels in Graphite Electrode segment and limited availability of cost effective coal during the year made it imperative for the Company, to optimise on specific coal consumption, to ensure healthy bottomline.

The Company will be affected by the completion of the exemption period of duty payment on one of its power generation facility. This will have an impact on the cost of power generation, going forward.

4. MATERIAL cHANGEs And coMMiTMENTs DuRING the year

No material changes and commitments, affecting the financial position of the Company have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

5. change in the nature of business

There is no change in the nature of business during the financial year 2014-15.

6. subsidiary, associate companies or joint ventures

(i) Subsidiary company

In terms of provisions of Section 136(1) of the Companies Act, 2013, the audited financial statements of M/s. HEG Graphite Products and Services Ltd, subsidiary Company of the HEG Ltd, have been placed on the website of the Company and are not being annexed in this Annual Report.

The financial statements of the subsidiary Company are kept for inspection by the shareholders at the registered office of the Company. The Company shall provide, the copy of the financial statements of its subsidiary Company to the shareholders upon their request.

There were no business operations in the subsidiary Company. The subsidiary reported a net loss of Rs.30,495/- in the financial year 2014-15.

The Managing Director of the Company does not receive any remuneration or commission from its subsidiary.

(ii) Associate companies or Joint ventures

There are two Associates of the Company namely M/s. Bhilwara Infotechnology Ltd and M/s. Bhilwara Energy Ltd. M/s. Bhilwara Infotechnology Ltd had a turnover of Rs.37.07 crore and Net Profit was Rs.4.65 crore in the financial year 2014-15. M/s. Bhilwara Energy Ltd had a turnover of Rs.416.77 crore and net Loss (after Minority Interest) was Rs.17.70 crore as per their financial statements (unaudited but limited reviewed and consolidated) for the financial year 2014-15. The Company has no Joint ventures.

No Company has become/ceased to be a Subsidiary, Associate or Joint venture during the financial year 2014-15.

A report on the performance and financial position of Subsidiary and Associate Companies as per the Companies Act, 2013 is annexed in the Form AoC-1 to the consolidated Financial Statement and hence not repeated here for the sake of brevity.

7. CONSOLiDATED FiNANCiAL STATEMENTS

The Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited consolidated financial statements together with Auditors' Report form part of the Annual Report.

8. DiViDEND

The Board has recommended a dividend at the rate of Rs.3/- per share on Equity Shares of face value of Rs.10/- each for the financial year ended 31st March, 2015, subject to your approval at the Annual General Meeting.

9. CORPORATE GOVERNANCE

A report on Corporate Governance forms part of the Annual Report along with the Auditors' Certificate on its compliance.

10. MANAGEMENT DiSCUSSiON AND ANALYSiS

Management Discussion and Analysis Report as required under the Listing Agreements with the Stock Exchanges forms part of the Annual Report.

11. INTERNAL Control Systems AND ADEQuACY THEREOF

The Company has an adequate internal control system commensurate with the size and nature of its business. An internal audit programme covers various activities and periodical reports are submitted to the management. The Audit Committee reviews financial statements, internal audit reports along with internal control systems. The Company has a well- defined organisational structure, authority levels and internal rules and guidelines for conducting business transactions.

12. PERSONNEL

a) industrial relations

The industrial relations during the period under review generally remained cordial at all the plants of the Company.

b) particulars of employees

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure - I.

13. puBLIC DEpOSiTS

Your Company has not invited any deposits from public/ shareholders in accordance with Chapter v of the Companies Act, 2013.

14. significant AND MATERiAL ORDERS pASSED By THE REGuLATORS OR COuRTS OR TRiBuNALS

There are no significant and material orders passed by the regulators or courts or tribunals during the financial year 2014-15.

15. CONSERvATiON OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is given as Annexure II forming part of this Report.

16. DIRECTORS AND KEY MANAGERIAL pERSONNEL

one of your Directors namely Shri Shekhar Agarwal, shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

The brief profile, pursuant to Clause 49 of the Listing Agreement of the Director retiring by rotation at the ensuing Annual General Meeting and being eligible, for re-appointment, forms part of the Corporate Governance Report.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Shri Raju Rustogi, Chief Financial Officer of the Company was designated as key Managerial Personnel of the Company under the provisions of Section 203 of the Companies Act, 2013 w.e.f. 30th July, 2014.

17. BOARD EVALUATiON

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

18. NOMiNATiON AND REMUNERATiON POLiCY

The Board, on the recommendation of the Nomination & Remuneration Committee approved a policy for appointment and removal of Directors, key Managerial Personnel and Senior Management and their remuneration. The policy is appended as Annexure - III forming part of this Report.

19. MEETiNGS OF THE BOARD

The Board of Directors met 4 (four) times in the financial year 2014-15. The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report.

20. contracts and arrangements wITH related pARTiES

All related party contracts/arrangements/transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseen and repetitive nature. The statement of transactions entered into pursuant to the omnibus approval so granted is placed before the Audit Committee for approval on a quarterly basis. The statement is supported by a Certificate from the CFO.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.

weblink:

http://www.hegltd.com/policy on related party transactions.aspx

There are no pecuniary relationships or transactions of Non- Executive Directors vis-a-vis the Company that have a potential conflict with the interests of the Company.

21. AUDIT COMMITTEE

The composition of the Audit Committee is stated in the Corporate Governance Report. All the recommendations of the Audit Committee were accepted by the Board during the financial year 2014-15.

22. AUDITORS

M/s. Doogar & Associates, Chartered Accountants and M/s. S.S. kothari Mehta & Co., Chartered Accountants, Auditors of the Company, will retire from their office at the ensuing Annual General Meeting. They are, however, eligible for re- appointment. They have furnished a Certificate to the effect that their re-appointment will be in accordance with the applicable provisions of the Companies Act, 2013. You are requested to consider their re-appointment. The Auditors' Report read along with notes to accounts is self-explanatory and therefore does not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

23. BUSINESS RISK MANAGEMENT

The objective of risk management at the Company is to protect shareholder value by minimising threats or losses and identifying and maximising opportunities. An enterprise- wide risk management framework is applied so that effective management of risk is an integral part of every employee's job.

The Risk Management Policy of the Company is in place. The Company's risk management strategy is integrated with the overall business strategies of the organisation and is communicated throughout the organisation. Risk management capabilities aide in establishing competitive advantage and allow management to develop reasonable assurance regarding the achievement of the Company's objectives.

The annual strategic planning process provides the platform for identification, analysis, treatment and documentation of key risks. It is through this annual planning process that key risks and risk management strategies are communicated to the Board. The effectiveness of risk management strategies is monitored both formally and informally by management and process owners. There is no major risk which may threaten the existence of the Company.

24. COST AUDITORS

The Cost Audit for financial year ended March 31, 2014 was conducted by M/s. N.D. Birla & Co. (M. No. 7907). The due date for filling the Cost Audit Report in xBRL mode for financial year ended March 31, 2014 was September 27, 2014 and Cost Audit Report was filed on September 09, 2014.

Based on the Audit Committee recommendations at its meeting held on 14th May, 2015, the Board has approved the re-appointment of M/s. N.D. Birla & Co. (M. No. 7907), as the Cost Auditors of the Company for the financial year 2015-16 on a remuneration of Rs.2 lakhs plus service tax and out of pocket expenses that may be incurred by them during the course of audit. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to M/s. N.D. Birla & Co., Cost Auditors is included in the Notice convening the Annual General Meeting.

25. SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. GSk & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is annexed herewith as Annexure IV. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. The Board has re-appointed M/s. GSk & Associates, Company Secretaries in practice as Secretarial Auditor of the Company for the financial year 2015-16.

26. CORPORATE SOCIAL RESPONSIBILITY (CSR)

As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of promotion of Education, Eradicating hunger & poverty, initiatives towards Community Service and rural development, Healthcare, Plantation & Environment Development, Protection of National heritage, art, culture etc. These projects were in accordance with the CSR Policy of the Company and Schedule VII of the Companies Act, 2013.

The CSR Committee comprises Shri Ravi Jhunjhunwala (Chairman), Shri D.N. Davar and Smt. Vinita Singhania.

The CSR policy may be accessed on the Company's website at the link mentioned below:

http://www.hegltd.com/pdf/Corporate Social Responsibility Policy.pdf

The Annual Report on CSR activities is enclosed as Annexure V forming part of this report.

27. INTERNAL AUDITORS

Based on the Audit Committee recommendations at its meeting held on 14th May, 2015, the Board has approved the re-appointment of M/s. S.L. Chhajed & Co, as the Internal Auditors of the Company for the financial year 2015-16.

28. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that:

i) In preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2015 and of the profit of the Company for the year under review;

iii) They have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safe guarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv) They have prepared the annual accounts on a going concern basis;

v) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

29. VIGIL MECHANISM /WHISTLE BLOWER POLICY

The Company has a vigil mechanism named "Whistle Blower Policy" in place. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and the policy is also posted on the website of the Company. The weblink is: http://www.hegltd.com/whistle-blower-policy.aspx

30. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

31. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT - 9 is annexed herewith as Annexure vI.

32. GENERAL DISCLOSURE

The Company has a group policy in place against Sexual Harassment in line with the requirements of the Sexual Harassment of women at the workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. Two complaints of Sexual Harassment were received during the financial year 2014-15 and were disposed off within the prescribed time-limit.

33. ACKNOWLEDGEMENTS

Your Directors wish to place on record, their appreciation for the valuable assistance and support received by your Company from banks, financial institutions, the Central Government, the Government of Madhya Pradesh, the Government of uttar Pradesh and their departments. The Board also thanks the employees at all levels, for the dedication, commitment and hard work put in by them for Company's achievements.

For and on behalf of the Board of Directors

Place: Noida (u.P.) Ravi Jhunjhunwala Dated:14th May, 2015 Chairman, Managing Director & CEO


Mar 31, 2013

Dear members,

The Directors have pleasure in presenting their 41st Annual Report and audited statements of accounts for the year ended 31st March, 2013.

1. (i) Financial Results

(Rs. in Crore)

2012-13 2011-12

Net Sales 1617.43 1423.99

Other Operating Income 5.18 0.62

Total Income from Operations (Net) 1622.61 1424.61

Other Income 13.60 16.79

Total Income 1636.21 1441.40

Profit before Exceptional items, Finance cost, Depreciation and 306.71 258.60 Amortisation

Exceptional Items (55.20) (92.85)

Profit before Finance cost, Depreciation and Amortisation 251.51 165.75

Finance cost 63.60 40.68

Profit before Depreciation and Amortisation 187.91 125.08

Depreciation and Amortisation 62.64 57.93

Profit Before Tax 125.27 67.14

Provision for Taxation:-

Current Year 16.09 6.66

Income Tax for earlier years 3.39 (1.84)

Net Profit for the Period 105.79 62.32

EPS (Basic) Rs. 26.48 15.34

(ii) Appropriations

Amount available for appropriation 406.23 331.17

Reversal of proposed dividend and dividend distribution tax on shares - 1.23 bought back Dividend :

a) On Equity Shares

Proposed Dividend 31.97 19.98

b) Dividend Distribution Tax

On Proposed Dividend 5.43 3.24

Transfer to:

a) General Reserve 25.00 7.50

b) Debenture Redemption Reserve - 1.25

c) Transfer from Debenture Redemption Reserve 25.07 -

Balance carried forward 368.90 300.43

2. Overall Performance

The Company recorded Net Sales Rs.1617.43 crore as compared with Rs.1423.99 crore in the previous year. The Net Profit has increased to Rs.105.79 crore as compared with Rs.62.32 crore in 2011-12 translating to basic earning per share at Rs.26.48 as against Rs.15.34 in Financial Year 2011-12.

3. Subsidiary Company and Consolidated Financial Statements

The statement pursuant to Section 212 of the Companies Act, 1956 relating to the subsidiary Company ''M/s HEG Graphite Products and Services Ltd'' is annexed. Also, the consolidated financial statements along with the Auditors Report thereon, form part of the Annual Report.

In terms of the Circular of the Ministry of Corporate Affairs dated 8th February, 2011, the Board of Directors has decided not to annex the annual accounts of the subsidiary Company in this Annual Report. The annual accounts of the subsidiary Company and the related detailed information shall be made available to the shareholders of the Company and the subsidiary Company seeking such information at any point of time. The annual accounts of the subsidiary company shall also be kept for inspection by any shareholder at the registered office of the Company and of the subsidiary Company. The Company shall furnish a hard copy of details of accounts of subsidiary Company to any shareholder, on demand.

4. Dividend

The Board, has recommended a dividend at the rate of Rs.8/- per share on Equity Shares of Rs.10/- each for the financial year ended 31st March, 2013, subject to your approval at the Annual General Meeting.

5. Operations

The analytical review of the Company''s performance and its businesses, including initiatives in the areas of Human Resources and Corporate Social Responsibility have been presented in the section of Management Discussion and Analysis of this Annual Report.

Graphite Electrodes

During the year under review, the production volumes of graphite electrodes were almost similar as compared with the last financial year. Operational efficiencies, better exchange rates coupled with controlled finance costs, improved margins.

Power Generation

Better availability of linkage coal for our captive thermal power plants and record power generation at our hydel power unit has helped improve the bottomline during the year.

The Company''s installed captive power capacity mitigates risk of erratic power supply from the State grid for the entire expanded Graphite Electrode capacity of 80,000 TPA.

6. Corporate Governance

A report on Corporate Governance forms part of the Annual Report along with the Auditors'' Certificate on its compliance.

7. Management Discussion and Analysis

Management Discussion and Analysis Report as required under the Listing Agreements with the Stock Exchanges forms part of the Annual Report

8. Internal Control Systems and adequacy thereof

The Company has an adequate internal control system commensurate with the size and nature of its business.

An internal audit programme covers various activities and periodical reports are submitted to the management. The Audit Committee reviews financial statements and internal audit reports along with internal control systems. The Company has a well defined organisational structure, authority levels and internal rules and guidelines for conducting business transactions.

9. Personnel

a) Industrial Relations

The industrial relations during the period under review generally remained cordial at all the plants of the Company.

b) Particulars of Employees

The information of employees receiving salary in excess of the limits as prescribed under the provisions of Sub-section (2A) of Section 217 of the Companies Act, 1956, who were employed throughout or for a part of the financial year under review is given as an annexure forming part of this Report.

10. Public Deposits

Your Company has not invited any deposits from public/ shareholders in accordance with Section 58A of the Companies Act, 1956.

11. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, is given as an annexure forming part of this Report.

12. Directors

Three of your Directors namely Shri D.N. Davar, Shri Shekhar Agarwal and Dr. Kamal Gupta shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board recommends their re- appointment.

Your Directors inform you about the resignation of Shri K N Memani w.e.f. 19th March, 2013. The Board appreciates the valuable contribution and guidance extended by Shri K. N. Memani during his tenure as a Director of the Company.

13. Auditors

M/s Doogar & Associates, Chartered Accountants and M/s S.S.Kothari Mehta & Co., Chartered Accountants, Auditors of the Company, will retire from their office at the ensuing Annual General Meeting. They are, however, eligible for re-appointment. They have furnished a Certificate to the effect that their re-appointment will be in accordance with limits specified in Sub-section (IB) of Section 224 of the Companies Act, 1956. You are requested to consider their re-appointment.

The Auditors'' Report read along with notes to accounts is self explanatory and therefore does not call for any further comments.

14. Cost Auditors

In conformity with the directives of the Central Government and based on the Audit Committee recommendations at its meeting held on May 3, 2013, the Board has approved the re- appointment of M/s. N.D. Birla & Co., as the Cost Auditors of the Company for the financial year 2013-2014, subject to approval of the Central Government.

15. Directors Responsibility Statement The Directors confirm that:

i) In preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2013 and of the profit of the Company for the year under review;

iii) They have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe guarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

iv) They have prepared the annual accounts on a going concern basis.

16. Acknowledgements

Your Directors wish to place on record, their appreciation for the valuable assistance and support received by your Company from banks, financial institutions, the Central Government, the Government of Madhya Pradesh, the Government of Uttar Pradesh and their departments. The Board also thanks the employees at all levels, for the dedication, commitment and hard work put in by them for Company''s achievements.

For and on behalf of the Board of Directors

Place: Noida (U.P.) Ravi Jhunjhunwala

Dated: May 3, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors have pleasure in presenting their 40th Annual Report and audited statements of accounts for the year ended 31st March, 2012.

1. (i) Financial results

(Rs. in crore)

2011-12 2010-11

Turnover :

Domestic 509.45 444.95

Export 1128.55 854.31

Less : Excise Duty 27.41 22.71

: Inter Division Sales 186.60 162.90

Net Sales 1423.99 1113.65

Other Income 16.79 26.81

Total Income 1440.78 1140.46

Profit before Exceptional items, Finance cost, Depreciation and Amortisation 258.60 246.85

Exceptional Items 92.85 –

Profit before Finance cost, Depreciation and Amortisation 165.75 246.85

Finance cost 40.68 21.57

Profit before Depreciation and Amortisation 125.08 225.28

Depreciation and Amortisation 57.93 57.31

Profit Before Tax 67.14 167.98

Provision for Taxation:-

Current Year 1.61 42.88

Deferred 5.05 (1.28)

Income Tax for earlier years (1.84) (2.48)

Net Profit for the Period 62.32 128.86

EPS (Basic) (Rs.) 15.34 30.08

(ii) Appropriations:-

Amount available for appropriation 331.17 362.62

Reversal of proposed dividend and dividend distribution tax on shares bought back 1.23 –

Dividend :

a) On Equity Shares

i) Interim Dividend – 21.42

ii) Proposed Dividend 19.98 21.42 b) Dividend Distribution Tax

i) On Interim Dividend – 3.41

ii) On Proposed Dividend 3.24 3.48

Transfer to :-

a) General Reserve 7.50 25.00

b) Debenture Redemption Reserve 1.25 19.04

Balance carried forward 300.43 268.85



2. Overall Performance

The Company recorded Net Sales Rs.1423.99 crore as compared with Rs.1113.65 crore in the previous year. The Net Profit was at Rs.62.32 crore as compared with Rs.128.86 crore in 2010-11 translating to basic earning per share at Rs.15.34 as against Rs.30.08 in Financial Year 2010-11.

3. Subsidiary Company & Consolidated Financial Statements

The statement pursuant to Section 212 of the Companies Act, 1956 relating to the Subsidiary Company 'M/s HEG Graphite Products and Services Ltd' is annexed. Also, the consolidated financial statements alongwith the Auditors Report thereon, form part of the Annual Report.

In terms of the Circular of the Ministry of Corporate Affairs dated 8th February, 2011, the Board of Directors has decided not to annex the annual accounts of the Subsidiary Company in this Annual Report. The annual accounts of the Subsidiary Company and the related detailed information shall be made available to the shareholders of the Company and the Subsidiary Company seeking such information at any point of time. The annual accounts of the Subsidiary Company shall also be kept for inspection by any shareholder at the registered office of the Company and of the Subsidiary Company. The Company shall furnish a hard copy of details of accounts of Subsidiary Company to any shareholder on demand.

4. Dividend

The Board, has recommended a dividend at the rate of Rs.5/- per share on Equity Shares of Rs.10/- each for the financial year ended 31st March, 2012, subject to your approval at the Annual General Meeting.

5. Operations

Graphite Electrodes

During the year under review, the production volumes of Graphite Electrodes were higher as compared with the last financial year. Growth in volumes was offset by increase in costs and foreign currency fluctuations which contributed to lower margins.

Power Generation

HEG's strategic planning resulted in reliable captive power generation of about 77 MW. The current capacity of power is self-sufficient at the expanded graphite electrode capacity levels of 80,000 TPA.

6. Capacity Expansion of the Graphite Electrode Plant at Mandideep

The expansion plan of graphite electrode manufacturing capacity of the Company from 66,000 TPA to 80,000 TPA was completed in February, 2012.

7. Buyback of its Equity Shares by the Company

The Board of Directors of the Company had approved the Buyback of its Equity Shares from open market through Stock Exchanges vide a Resolution passed at its meeting held on the 14th March, 2011. The Buyback was approved for an aggregate amount upto Rs.67.50 crore. The Buyback of shares commenced on the 11th April, 2011. The Company completed the buy back of Equity Shares through open market purchases on 11th November, 2011. 28,85,765 Shares were bought back and extinguished and entire amount of Rs.67.50 crore was utilised.

8. Corporate Governance

A report on Corporate Governance forms part of the Annual Report along with the Auditors' Certificate on its compliance.

9. Management Discussion and Analysis

Management Discussion and Analysis Report as required under the Listing Agreements with the Stock Exchanges forms part of the Annual Report

10. Internal Control Systems and Adequacy thereof

The Company has an adequate internal control system commensurate with the size and nature of its business.

Internal audit programme covers various activities and periodical reports are submitted to the management. The Audit Committee reviews financial statements and internal audit reports along with internal control systems. The Company has a well defined organisational structure, authority levels and internal rules and guidelines for conducting business transactions.

11. Personnel

a) Industrial Relations

The industrial relations during the period under review generally remained cordial at all the plants of the Company.

b) Particulars of Employees

The information of employees receiving salary in excess of the limits as prescribed under the provisions of sub section (2A) of Section 217 of the Companies Act,1956, who were employed throughout or for a part of the financial year under review is given as an annexure forming part of this Report.

12. Public Deposits

Your Company has not invited any deposits from public/shareholders in accordance with Section 58A of the Companies Act, 1956.

13. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, is given as an annexure forming part of this Report.

14. Directors

Two of your Directors namely Dr. O. P. Bahl and Shri Riju Jhunjhunwala shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment. The Board recommends their re-appointment.

15. Auditors

M/s Doogar & Associates, Chartered Accountants and M/s S.S. Kothari Mehta & Co., Chartered Accountants, Auditors of the Company, will retire from their office at the ensuing Annual General Meeting. They are, however, eligible for re- appointment. They have furnished a Certificate to the effect that their appointment will be in accordance with limits specified in sub-section (IB) of Section 224 of the Companies Act, 1956. You are requested to consider their appointment.

The Auditors' Report read alongwith notes to accounts is self explanatory and therefore does not call for any further comments.

16. Directors Responsibility Statement

The Directors confirm that:

(i) in preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2012 and of the profit of the Company for the year under review;

(iii) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) they have prepared the annual accounts on a going concern basis.

17. Acknowledgements

Your Directors wish to place on record, their appreciation for the valuable assistance and support received by your Company from Banks, Financial Institutions, Central Government, Government of Madhya Pradesh, Government of Uttar Pradesh and their departments. The Board also thanks the employees at all levels, for the dedication, commitment and hard work put in by them for Company's achievements.

For and on Behalf of the Board of Directors

Ravi Jhunjhunwala

Chairman & Managing Director

Place: Noida (U.P)

Dated: May 10, 2012


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting their 39th annual report and audited statements of accounts for the year ended 31st March, 2011.

1. (i) Financial results (Rs. in crore)

2010-11 2009-10

Turnover :

Domestic 444.95 461.17

Export 854.31 807.27

Less : Excise Duty 22.71 21.15

: Inter Division Sales 162.90 115.89

Net Sales 1,113.65 1,131.40

Other Income 38.43 14.99

Total Income 1,152.08 1,146.39

Profit before Interest, Depreciation and Amortisation 262.35 354.00

Interest 36.62 59.26

Profit before Depreciation and Amortisation 225.73 294.74

Depreciation and Amortisation 57.65 52.41

Profit Before Tax 168.07 242.32

Provision for Taxation:-

Current year 42.97 70.48

Deferred (1.28) (0.09)

Fringe Benefit Taxes - (0.01)

Income Tax for earlier years (2.48) 0.88

Net Profit for the Period 128.86 171.06

EPS (Basic) 30.08 41.10

EPS (Diluted) 30.08 40.91

(ii) Appropriations

Amount available for appropriation 362.62 316.94

Dividend :

a) On Equity Shares

i) Interim Dividend 21.42 -

ii) Proposed Dividend 21.42 42.83

b) Corporate Dividend Tax

i) On Interim Dividend 3.41 -

ii) On final Dividend 3.48 7.28

Transfer to :

a) General Reserve 25.00 25.00

b) Capital Redemption Reserve - 3.30

c) Debenture Redemption Reserve 19.04 4.77

Balance carried forward 268.85 233.76

2. Overall Performance

The Company recorded Net Sales Rs.1113.65 crore as compared with Rs.1131.40 crore in the previous year. The Net Profit was at Rs.128.86 crore as compared with Rs.171.06 crore in 2009-10 translating to basic earning per share at Rs.30.08 as against Rs.41.10 in FY 2009-10.

3. Subsidiary Company & Consolidated Financial Statements

The statement pursuant to Section 212 of the Companies Act, 1956 relating to the Subsidiary Company 'M/s HEG Graphite Products and Services Ltd' is annexed. Also, the consolidated financial statements along with the Auditors Report thereon, form part of the Annual Report.

In terms of the Circular of the Ministry of Corporate Affairs dated 8th February, 2011, the Board of Directors has decided not to annex the annual accounts of the Subsidiary company in this Annual Report. The annual accounts of the Subsidiary company and the related detailed information shall be made available to the shareholders of the Company and the Subsidiary company seeking such information at any point of time. The annual accounts of the Subsidiary Company shall also be kept for inspection by any shareholder at the registered office of the Company and of the Subsidiary Company. The Company shall furnish a hard copy of details of accounts of Subsidiary Company to any shareholder on demand.

4. Dividend

The Board of Directors had approved the payment of Interim- Dividend @ Rs.5/- per Equity Share of Rs.10/- each at its meeting held on the 7th February, 2011.

The Board, has recommended a final dividend at the rate of Rs.5/- per share on Equity Shares of Rs.10/- each for the financial year ended 31s March, 2011, subject to your approval at the Annual General Meeting.

5. Operations Graphite Electrodes

During the year under review, the production volumes of Graphite Electrodes were higher as compared with the last financial year. Growth in volumes was offset by moderation in realisations which contributed to lower margins.

Power Generation

HEG's strategic planning resulted in reliable captive power generation of about 77 MW. The current capacity of power will be self-sufficient even at expanded graphite electrode capacity levels of 80,000 TPA.

6. Capacity Expansion of the Graphite Electrode Plant at Mandideep

The expansion plan of graphite electrode manufacturing capacity of the Company to 80,000 TPA from current level of 66,000 TPA is progressing as per schedule.

Phase I of the capacity expansion is operational, with full capacity commercial production expected to be operational by October 2011.

7. Buyback of its Equity Shares by the Company

The Board of Directors of the Company approved the Buyback of its Equity Shares from open market through Stock Exchanges vide a Resolution passed at its meeting held on the 14th March, 2011. The Buyback was approved for an aggregate amount upto Rs.67.50 Crores. The Buyback of shares commenced on the 11th April, 2011.

8. Corporate Governance

A report on Corporate Governance forms part of the Annual Report along with the Auditors' Certificate on its compliance.

9. Management Discussion and Analysis

Management Discussion and Analysis Report as required under the Listing Agreements with the Stock Exchanges forms part of the Annual Report.

10. Internal Control Systems and Adequacy thereof

The Company has an adequate internal control system commensurate with the size and nature of its business.

Internal audit programme covers various areas of activities and periodical reports are submitted to the management. The Audit Committee reviews financial statements and internal audit reports along with internal control systems. The Company has a well-defined organisational structure, authority levels and

internal rules and guidelines for conducting business transactions.

11. Personnel

a) Industrial Relations

Industrial relations during the period under review generally remained cordial at all the plants of the Company.

b) Particulars of Employees

The information of employees receiving salary in excess of the limits as prescribed under the provisions of sub section (2A) of Section 217 of the Companies Act,1956, who were employed throughout or for a part of the financial year under review is given as an annexure forming part of this Report.

12. Public Deposits

Your Company has not invited any deposits from public/ shareholders in accordance with Section 58A of the Companies Act, 1956.

13. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, is given as an annexure forming part of this Report.

14. Directors

a) Shri Riju Jhunjhunwala at his request was relieved from the position of Executive Director w.e.f. 27th July, 2010 and continues to be a Non-Executive Director

b) Three of your Directors namely Shri L.N. Jhunjhunwala, Dr. Kamal Gupta and Shri P. Murari shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board recommends their reappointment.

c) LIC nominated Shri Lalit Mohan Lohani as its nominee on the Board of the Company in place of Shri Mohanraj Nair. His appointment was approved w.e.f. 27th July, 2010. The Board appreciates the services rendered by Shri Mohanraj Nair during his tenure as Director of the Company.

d) Your Directors inform you about the sad demise of Shri V.K. Mehta, who was Director on the Board of the Company and appreciate the valuable services rendered by Shri V K Mehta during his tenure as a Director of the Company. Shri Niket A.R.

Mehta, who was Alternate Director to Shri V.K. Mehta, consequently ceased to be the Alternate Director.

15. Auditors

M/s Doogar & Associates, Chartered Accountants and M/s S.S. Kothari Mehta & Co., Chartered Accountants, Auditors of the Company, will retire from their office at the ensuing Annual General Meeting. They are, however, eligible for re- appointment. They have furnished a Certificate to the effect that their appointment will be in accordance with limits specified in sub-section (IB) of Section 224 of the Companies Act, 1956. You are requested to consider their appointment.

The Auditors' Report read alongwith notes to accounts is self explanatory and therefore does not call for any further comments.

16. Directors Responsibility Statement

The Directors confirm that:

(i) in preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2011 and of the profit of the Company for the year under review;

(iii) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) they have prepared the annual accounts on a going concern basis.

17. Acknowledgements

Your Directors wish to place on record, their appreciation for the valuable assistance and support received by your Company from banks, financial institutions, Central Government, Govt. of Madhya Pradesh, Govt. of Uttar Pradesh and their departments. The Board also thanks the employees at all levels, for the dedication, commitment and hard work put in by them for the Company's achievements.

For and on Behalf of the Board of Directors

Place : Noida Ravi Jhunjhunwala

Dated: April 29, 2011 Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting their 38th Annual Report and audited statements of accounts for the year ended 31st March, 2010. We are delighted to report a buoyant operating performance. Our graphite electrode segment continued to contribute strongly towards revenue growth, primarily driven by improved operating efficiencies, cost effectiveness measures and a better product mix.

1) (i) FINANCIAL RESULTS (Rs. in Crore)

2009-10 2008-09

Turnover:

Domestic 461.17 317.59

Export 807.27 832.35

Less : Excise Duty 21.15 23.98

: Inter Division Sales 115.89 96.96

Net Sales 1131.40 1029.00

Other Income 14.99 16.94

Total Income 1146.39 1045.95

Profit before Interest, Depreciation and Amortization 354.00 274.73

Interest 59.26 66.75

Profit before Depreciation and Amortization 294.74 207.98

Depreciation and Amortization 52.41 46.60

Profit Before Tax 242.32 161.39

Provision for Taxation :-

Current Year 70.48 46.95

Deferred (0.09) 1.37

Fringe Benefit Tax (0.01) 0.48

Income Tax for earlier Years 0.88 5.60

Net Profit for the Period 171.06 106.99

EPS (Basic) 41.10 24.36

EPS (Diluted) 40.91 24.36

(ii) Appropriations

Amount available for appropriation 316.94 202.97

Dividend :

a) Proposed Dividend on Equity Shares 42.83 27.43

b) Corporate Dividend Tax 7.28 4.66 Transfer to :

a) General Reserve 25.00 25.00

b) Capital Redemption Reserve 3.30 --

c) Debenture Redemption Reserve 4.77 --

Balance carried forward 233.76 145.87

2. OVERALL PERFORMANCE

The Company recorded Net Sales Rs. 1131.40 crore as compared to Rs. 1029 crore in the previous year. The Net Profit increased to Rs.171.06 as compared to Rs. 106.99 in 2008-09 translating to basic earning per share at Rs. 41.10 as against Rs. 24.36 in FY 2008-09. The core graphite electrodes segment and the power division posted healthy growth rates.

3. SUBSIDIARY COMPANY & CONSOLIDATED FINANCIAL STATEMENTS

M/s HEG Graphite Products and Services Ltd was incorporated as an wholly owned subsidiary of the Company on 18th September, 2009. The accounts of Subsidiary Company form part of the Annual Report alongwith the statement pursuant to Section 212 of the Companies Act, 1956. Also the consolidated financial statements alongwith the Auditors Report thereon, form part of the Annual Report.

4. DIVIDEND

The Board, has recommend a dividend at the rate of Rs.10/- per share on Equity Shares of Rs.10/- each for the financial year ended March 31, 2010, subject to your approval at the Annual General Meeting.

5. OPERATIONS

GRAPHITE ELECTRODES

During the year under review, the production of Graphite Electrodes was lower as compared to FY 2008-09. Being a challenging year, when the volumes witnessed moderation, the margins still remained encouraging.

POWER GENERATION

HEGs strategic planning has resulted in reliable captive power generation of about 77 MW. A new thermal power plant with a capacity of 33 MW has commenced operations since May, 2009, making it a total of two thermal power plants with total capacity of about 64 MW and a hydroelectric power plant with a capacity of 13.5 MW. The current capacity will result in a self-sufficiency level of power at 80,000 TPA production of Graphite Electrodes.

6. CAPACITY EXPANSION OF GRAPHITE ELECTRODE PLANT AT MANDIDEEP

Your Company has at its Board Meeting held on 29th January, 2010 approved the expansion plans of its graphite electrodes manufacturing capacity to about 80,000 TPA from current level of about 66,000 TPA at an estimated capital cost of Rs. 206 crore. This will help HEG consolidate its manufacturing lead in graphite electrodes segment at the shortest schedule and optimum cost.

7. BUYBACK OF EQUITY SHARES BY THE COMPANY

The Company successfully completed the Buyback of Equity Shares on 18th August, 2009 with the buyback and extinguishment of 32,95,703 shares at an average price of Rs. 147.15 per share. Almost the entire amount approved for Buyback i.e. Rs. 48.50 Crore was utilized.

8. CORPORATE GOVERNANCE

A report on Corporate Governance forms part of the Annual Report along with the Auditors Certificate on its compliance.

9. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion & Analysis Report as required under the Listing Agreements with the Stock Exchanges forms part of the Annual Report.

10.INTERNAL CONTROL SYSTEMS AND ADEQUACY THEREOF

The Company has an adequate internal control system commensurate with the size and nature of its business.

Internal audit programme covers various areas of activities and periodical reports are submitted to the management. The Audit Committee reviews financial statements and internal audit reports along with internal control systems. The Company has a well-defined organizational structure, authority levels and internal rules and guidelines for conducting business transactions.

11. PERSONNEL

A) INDUSTRIAL RELATIONS

The industrial relations during the period under review generally remained cordial at all the plants of the Company.

B) PARTICULARS OF EMPLOYEES

The information of employees getting salary in excess of the limits as specified under the provisions of sub section (2A) of Section 217 of the Companies Act,1956, who were employed throughout or for a part of the financial year under review is given as an annexure forming part of this Report.

12. PUBLIC DEPOSITS

Your Company has not invited any deposits from public / shareholders in accordance with Section 58A of the Companies Act, 1956.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO.

The information with regard to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988, is given as an annexure forming part of this Report.

14. DIRECTORS

a) The Board of Directors had appointed Shri Riju Jhunjhunwala, as Executive Director of the Company at its meeting held on 30th April, 2009, for a period of 5 years and approved his remuneration for a period of 1 year. Now his remuneration has been approved for the period of 2 years as per the terms and conditions enumerated in the resolution being put up for your approval.

b) Three of your Directors namely Shri D.N. Davar, Shri K.N. Memani and Shri Shekhar Agarwal shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board recommends their appointment.

c) Shri R.C. Surana has ceased by way of premature retirement to be the Executive Director, Director and Employee of the Company in accordance with a mutual agreement between Shri R.C. Surana and the Company w.e.f. 30th April, 2010. The Board appreciates and puts on record the services rendered by Shri R.C. Surana during his association with the Company.

15. AUDITORS

M/s Doogar & Associates, Chartered Accountants and M/s S.S. Kothari Mehta & Co., Chartered Accountants, Auditors of the Company, will retire from their office at the ensuing Annual General Meeting. They are, however, eligible for re-appointment. They have furnished a Certificate to the effect that their appointment will be in accordance with limits specified in sub-section (IB) of Section 224 of the Companies Act, 1956. You are requested to consider their appointment.

The Auditors Report read alongwith notes to accounts is self explanatory and therefore does not call for any further comments.

16. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that:

(i) in preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from the same;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March,2010 and of the profit of the Company for the year under review;

(iii) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; and

(iv) they have prepared the annual accounts on a going concern basis.

17. ACKNOWLEDGEMENTS

Your Directors wish to place on record, their appreciation for the valuable assistance and support received by your Company from Banks, Financial Institutions, Central Government, Govt. of Madhya Pradesh, Govt. of Uttar Pradesh and their departments. The Board also thanks the employees at all levels, for the dedication, commitment and hard work put in by them for Companys achievements.

For and on behalf of the Board,

Place :Noida (U.P.) (RAVI JHUNJHUNWALA)

Dated:April 30, 2010 CHAIRMAN & MANAGING DIRECTOR

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