Human Resource

About company
HEG Ltd, a premier company of the LNJ Bhilwara group, is today India's
leading graphite electrode manufacturer. It has one of the largest
integrated Graphite Electrode plants in the world, processing
sophisticated UHP (Ultra High Power) Electrodes.
The company exports over 80% of its production to more than 25
countries of the world.
The position the company enjoys today in India and abroad is largely
due to its commitment to constant upgradation of its product quality to
match international standards and to meet new challenges to win and
excel in all situations.
In the 1990's, we set our Vision to be : A vibrant globally
acknowledged top league player in Graphite Electrodes and allied
businesses with commitment to growth, innovation, quality and
customer focus.
In Graphite, our focus is on UHP grade electrodes, and we have
expanded our product range and established the same on some of the
toughest furnaces of our customers. Today, we have years of experience
supplying quality UHP grade electrodes all over the world.
The encouragement from our customers has led us to increase
production capacity and become a significant global producer of quality
UHP grade electrodes for EAF application. Our ability to source the best
raw materials from sources worldwide and the skills of our human
resources has been the key to our growth.
To maintain our competitiveness, we have set up a Captive Power Plant
totaling more than 77 MW.
As a responsible graphite electrode manufacturer, we continue to invest
in technology, development of new products and in our human
resources.

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Board members
Shri L N Jhunjhunwala
Shri Ravi Jhunjhunwala
Shri Shekhar Agarwal
Shri Kamal Gupta
Shri D N Davar
Shri P Murari
Shri Lalit Mohan Lohani
Shri Riju Jhunjhunwala
Shri Om Parkash Bahl

Chairman-Emeritus
Chairman & Managing Director
Vice-Chairman
Director
Director
Director
Nominee Director-LIC
Director
Director

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Products
1. Graphite Electrode Division
The main business of HEG is graphite which accounts for 80% of the
revenue. Set up in 1977, in technical and financial collaboration with
Societe Des Electrodes Et Refractaires Savoie (SERS), a subsidiary of
Pechiney of France, HEG is now the largest integrated graphite plant in
the world. Spread over an area of about 170 acres, HEG (graphite
division) has facilities for production of Graphite Electrodes and Graphite
Specialities. Its plant is located at Mandideep near Bhopal (MP).
The plant has a annual capacity to make 80,000 MT of UHP grade
electrodes. It has three captive power generation facilities which can
together produce around 77 MW which fulfils almost the entire
requirement of the graphite plant.

2. Power
One of the major bottlenecks plaguing the Indian industry has been the
shortage
of power. At HEG Limited, we realized this as early as 1995 and
overcame this problem by setting up the group's first hydropower project
of 13.5 MW rated capacity in Tawanagar, district HOSHANGABAD (M.P.)
which was commissioned in 1997. The power generated at this unit is
wheeled to the graphite plant at Mandideep. This not only ramped up the
efficiency of the graphite plant but also opened up a window of
opportunity for us to enter the area of power generation.
Subsequently, when the Graphite Electrode capacity was increased from
66,000 tonnes/annum to 80,000 tonnes/annum, We have 64 MW captive

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termal power plant and 13.5 MW hydel power plant. The main
equipments including the Turbine were sourced from BHEL, India.
3. Activated Carbon Fabric (ACF)
ACF is a flexible form of activated carbon.
The activated carbon fabric is
mechanically weak but highly porous in
nature. Due to this, it possesses unique
characteristics as compared to
conventional activated carbon, which is
commonly used in granular, palletised,
powdered and moulded form. Due to a
thin fibrous shape in activated carbon
fabric, a fast intraparticle adsorption
kinetics takes place in gas and liquid
phase adsorption.
Molecules/atoms of pollutants have an
affinity towards activated carbon fabric
surface by physical adsorption at low
temperatures.

In physical adsorption there is a Van Der Waals interaction, having a long range,
but weak forces. Molecules of pollutant bouncing across the activated carbon
fabric surface gradually loses its energy and finally comes to rest on it. Due to
weak bonds in the physical adsorption molecules can be removed from the
activated carbon fabric surface by giving a heat energy. This property is utilised
in regenerating activated carbon fabric.
Features of ACF
It is of minimum 90% pure form of activated carbon
It is soft and easy to handle
It has a BET surface area (SBET) of the range from 1,000 to 2,500 m2 g-1
with a high degree of adsorption and desorption characteristics. Effective
adsorption is several hundred times higher than that of GAC, PAC or
palletized activated carbon.

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ACF is made up of filament yarn, due to which ACF is electrically
conductive and hence it can be regenerated by passing a low voltage current
across the ACF surface or by heating ACF at 100 oC for 15 to 30 minutes.
The distribution of pore size is in narrow range < 10 nm.
Usage
ACF is used in :
Air-conditioner filters.
Air purifying filters.
Clean rooms.
All other types of pollution control filters.
Anti pollution masks - for personal protection against gaseous vapours /
fumes and bad odours.
Refrigerator deodouriser - to arrest odours in refrigerators.
Cigarette filters - to trap harmful chemicals present in cigarette smoke.
B. Carbon Blocks
HEG also makes Fine Grain Carbon Blocks for various applications on special
orders. These blocks are used by the customers to make value added products
like Heat Exchangers, etc.
C. Graphite Specialities
HEG has a small graphite Speciality division to cater to the requirements of
customers who need Graphite Products in specific sizes and shapes. These are
manufactured to individual customer requirements as per specs and
requirements

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Achivements
Awarded ISO 9001:2008 & ISO 14001:2004 Certifications.

Awarded 'Rajiv Gandhi National Quality Commendation Award 2001

for Quality" by the Bureau of Indian Standards, Government of India.
HEG Ltd bagged the prestigious National Export Award instituted by
the Ministry of Commerce, Government of India, for outstanding export
performace for the year 1997-98.
HEG has also won the country's top export award instituted by the
Chemical & Allied Products Export Promotion Council (CAPEXIL) for
outstanding exports for 18 consecutive years. For 2001-02, HEG was
awarded the Highest Export Award.
HEG has the largest Integrated Graphite Electrodes manufacturing
plant in South Asia and the Middle East. It is also the second largest in
the world.
HEG has been regularly exporting electrodes since 1981 and today
exports more than 80% of its production.
HEG's graphite electrodes are exported to 25 countries around the
world, including developed countries like USA, Canada, Germany,
France, Italy, South Korea, Australia etc. - a reward for our
commitment to World winning Quality and Performance.

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Human Resource Management

HEG operates in an industry where technical
competence and expertise is paramount. The company
maintains that Human Resources is a key driver of
business growth.
Organizational Development
HEG believes that productivity enhancement comes
from well-structured and focused training and
development programmes. The Company continually
endeavours to equip its workforce with the latest tools
and techniques to help
them raise their level of efficiency and effectiveness. In 2003, M/S Hewitt
Associates were retained by HEG for HR Intervention and initiatives broadly
covering Job Evaluation, Performance Measurement, Competency Assessment
and Development, Organization Re-structuring and Reward Management. The
company has subsequently implemented most of the recommendations and is of
the view that each of these initiatives would go a long way in fostering an
environment that allows employees to fully utilize their abilities to perform
better and to drive the performance of the company.
Fostering a Quality-conscious organisational culture
Quality is not merely limited to being the cornerstone of HEG's sustainable
competitive advantage but is actively sought to be used as a facilitator of
business growth. The Company on its part, constantly engages its employees,

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programmes aimed at ingraining a culture of quality in its workforce. HEG has
further extended the quality initiative to its processes via a comprehensive
Statistical Process Control System (SPC) based on Six Sigma Tools &
Techniques. This has enabled the Company to attain international standards in
manufacturing besides enhancing productivity. Moreover, the Company invites
global consultants from time to time to seek assistance in its efforts to
continuously improve processes.
Performance Metrics and Remuneration
The Company manages a highly-motivated and capable team of employees.
Besides, the nature of the business requires that in-house competence and
expertise be conserved and developed. As a manifestation of that concept, HEG
has outlined a performance management system with the Balanced Score Card
as the core. This seeks to not only motivate employees but also attract fresh
talent into the fold.
Competency Sustainment
Present-day best practices require that succession planning not be restricted to
senior management but also encompass key positions across relevant job
categories. HEG as a truly global and modern organisation believes in preparing
tomorrow's leaders today. To that end, the Company has put in place an
effective process to sustain a talent pool that can seamlessly handle
organisational change at all times.
Industrial Relations
HEG has consistently chosen to engage its unions and labour force while
initiating major changes that directly affect them. Furthermore, employees are
empowered to bring to the fore issues relevant to them from time to time. The
manner of engagement between the management and its workforce over the
years has led to the creation of mutual understanding and trust between the two.

technology

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The principal raw materials used in the manufacture of electrodes are Needle
coke and pitch.
The Needle coke is crushed, screened and mixed with pitch in controlled
proportion at about 160C. The paste, extruded through an extrusion press, is
stored as 'Green Stock'. The Green Stock is baked slowly to 800C in
specially designed furnaces. The meticulously controlled conditions ensure
the pitch cokes satisfactorily. Before coking, the pitch loses a considerable
amount of volatile matter and the resulting electrodes are known as 'Baked
Electrodes'.
For high mechanical strength, density and current carrying capacity, the
Baked Electrodes are impregnated with special pitch to fill completely the
porosity which results from the volatile matter being driven off during baking.
Following impregnation, the products are baked again to ensure complete
coking of Impregantion Pitch.
The Baked Electrodes then undergo a process of Graphitisation, which
involves heating them to temperatures in the range of 2800 - 3000C in
lengthwise graphitisation furnaces. The Graphitisation process itself lasts
only 8 to 12 hours and the cooling down period takes several hours.
After being taken out from the furnace, the electrodes are subjected to very
strict quality control checks before being passed for machining.
The machining operation involves turning of the electrodes to the required
diameter and matching end sockets to accept threaded nipples. All sockets
and nipples are machined to very close tolerances.

We accord the highest priority to the protection of the environment and

conservation of resources in our premises. In this endeavour we are
committed to:

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Maintaining cleanliness at our workplace.
Optimize utilization of resources including water, energy, stationery.
Wastes minimization, including solid and liquid wastes.
Compliance with all the applicable laws and other requirements.
strive for continual improvement in our environmental performance.
Create environmental awareness among our employees, contractors and
other stakeholders.

VISION
A vibrant globally acknowledged top league player in Graphite Electrode
& allied business with commitment to growth, innovation, quality &
customer focus.
MISSION
To become a leading international player in Graphite Electrodes &
related businesses by leveraging our core competence and there by
enhancing value to our customers, shareholders, employees & society.

Quality Policy

We, in heg, are

committed to being
a customeroriented

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organisation where quality is the inspiration and innovation is the way of
life.
We believe that world is our market and therefore competitive quality of
our products, response and service is the essence of our being.
We recognise that the involvement of the employees is basic to quality
and for continuing growth and improvements.
We would involve our suppliers in the continuing programme for quality
improvement.
We believe that quality can only be obtained in a safe, clean and orderly
environment and therefore, we are committed to these basics in our day
to day activity.
Safety Policy
We in heg, are committed to being a safe and eco-friendly organisation.
We believe that protection of our personnel and the environment is one
of our prime responsibilities.
We, therefore, commit ourselves to:
Introduce sound safety, health and environment management practices.
Conduct our business responsibly through adoption of safer, healthier,
cleaner and energy-efficient technologies.
Comply with all applicable legal and other requirements, related to safety,
health and environment.
Continually improve our safety, health and environmental performance by
developing effective controls of our operations.
Investigate the accidents to identify root causes and introduce corrective
and preventive measures.
Generate a high degree of awareness amongst all the interested parties.
K Vaidyanathan
(Chife Operating Officer)

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The Company's philosophy on Corporate Governance envisages the

attainment of the highest levels of transparency, accountability and
equity, in all facets of its operations, and all its interactions with the
stakeholders,
including shareholders, employees, customers, government, suppliers
and lenders and to build the confidence
of the society in general. The company is committed to pursue growth by
adhering to the highest national and
international standards of Corporate Governance.

Chairman message

Dear Shareholders,
Fiscal 2012-13 was a heartening year when, despite prevailing
challenges, we grew net sales 14% and net profit 70% over the
previous year.
Challenging times
Graphite electrodes, a vital input in steel making, represents an indirect
proxy of economic growth. In 2012, the global economic momentum
decelerated on account of various intertwined factors the eurozone

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crisis, US fiscal cliff, forex volatility, disruption of global oil supplies and
slowing investments in emerging economies. The result is that the
global steel industry grew a mere 1.2% (but for China it would have
gone down), the lowest in a decade. Global steel players incurred
sizeable losses in 2012. As a natural extension, this affected graphite
electrode demand. Long-term contracts gave way to need-based spot
purchases. The global industry encountered a 100,000 MT increase in
production capacity (65,000 MT in China), creating an oversupply that
pared realisations.
Inspired response
The scenario was even more challenging for HEG Limited. The
Company commissioned its 14,000 TPA expansion during the previous
year, taking its total capacity to 80,000 TPA. So at a time when even
marketing the volumes of the previous year would have posed a
challenge, the Company was now required to bring new capacities on
stream without a compromise in efficiencies on the one hand and with
adequate marketing on the other.
I am happy to state that HEG responded commensurately to the
situation. The Company created new markets and customers. It
marketed value-added products to discerning customers. It optimised
resource consumption. It strengthened operating efficiencies. It
widened funds sourcing and rationalized costs (for working capital) by
close to 100 bps. Besides, the Company was fortunate that abundant
rainfall translated into the second highest hydropower generation in our
history. Besides our thermal power efficiencies were the best ever too.
The result was that despite a slowdown, the Companys sales volumes
remained at 2011-12 levels; the Company improved realisations at the
time of an industry-wide decline in realisations.
Fast forward
The global economy is expected to revive gradually even as downside
risks remain significant. The recessionary conditions in Europe could
persist; the Euro region will continue to pose the largest global
downside risk. The IMF estimate for global GDP growth in 2013 is
3.25% (a downgrade from its initial estimate of 3.5%).
Once the global economy begins to revive, inventory restocking could
emerge coupled with improved steel production. Global steel usage is

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expected to grow from 1.2% in 2012 to 2.9% in 2013 (Source: World
Steel Association), strengthening EAF furnace output and rising
graphite electrode demand. This rebound could well be driven by the
US, where the US economy is estimated to grow 1.7% in 2013. The
EAF-based steel sector (more than 60% of the US steel capacity) could
catalyse the demand for graphite electrodes.
While the demand side appears tentatively encouraging, supply side
estimates suggest 130,000 MT of additional graphite electrode capacity
coming into play in 2013-14 (100,000 MT in China), increasing the
overhang and depressing realisations.
In India, the proposed infrastructural investments indicate a rapid
increase in steel consumption. A number of integrated steel producers
are commissioning EAF units, the fastest and the most cost-effective
route to address increasing steel demand. In turn, this is likely to
strengthen the demand for graphite electrodes, creating a widening
market for local players like us.
Roadmap
HEG has created a multi-pronged blueprint to sustain its momentum.
Operations: Cost optimisation and quality management will remain
priorities. Having stabilised a highly automated facility in 2012-13, the
Company will maximise utilization leading to cost reduction, widen its
sourcing to secure timely and cost effective input supplies, and save
energy.
Marketing: The Company will strengthen customer relationships to
account for a larger wallet share, widen its geographic presence and
manufacture larger electrodes.
Financing: The Company will seek to stay liquid, optimise the cost of
funds and strengthen interest cover and engage in progressive debt
repayment.
Value
HEG has invested in various initiatives to enhance stakeholder value
across the long-term. What was an Rs 565 crore revenue company in
2002-03, grew to Rs 946 crore in 2007-08 and Rs 1,617 crore in 201213. This is the result of the Companys sustained investment in its

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business during industry downtrends, thereby protecting its viability
across market cycles.
On behalf of the management and the Board of Directors, I would like to
thank you for your continued support. I also take this opportunity to
thank our customers, employees, suppliers, service providers, financial
institutions and bankers for their contribution towards the Companys
success.
With best regards,
Ravi Jhunjhunwala
Chairman & Managing Director

Director Report
Print
Mar2012 Mar 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
Net Sales

2011-12

1617.43

1423.99

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Other Operating Income

5.18

Total Income from Operations (Net)

Other Income
Total Income

0.62

1622.61
13.60

16.79

1636.21

1441.40

Profit before Exceptional items, Finance

cost, Depreciation and
306.71
Amortisation
Exceptional Items

1424.61

258.60

(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

Depreciation and Amortisation
Profit Before Tax

187.91
62.64

125.27

125.08
57.93

67.14

Provision for Taxation:Current Year

Income Tax for earlier years
Net Profit for the Period

16.09

6.66
3.39

105.79

(1.84)
62.32

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EPS (Basic) Rs.

26.48

15.34

(ii) Appropriations
Amount available for appropriation

406.23

Reversal of proposed dividend and dividend

distribution tax on shares
bought back Dividend :

331.17

1.23

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

b) Debenture Redemption Reserve

7.50
-

1.25

c) Transfer from Debenture Redemption Reserve

25.07

Balance carried forward

300.43

2. Overall Performance

368.90

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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

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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

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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

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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 &

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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

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Place: Noida (U.P.)

Ravi Jhunjhunwala

Dated: May 3, 2013

Chairman & Managing Director

Recruitment
Recruitment refers to the process of attracting, screening, selecting,
and onboarding a qualified person for a job. At the strategic level it may
involve the development of an employer brand which includes an
'employee offering'.
The stages of the recruitment process include: job analysis and
developing a person specification; the sourcing of candidates
by networking, advertising, or other search methods; matching
candidates to job requirements and screening individuals using testing
(skills or personality assessment); assessment of candidates'
motivations and their fit with organisational requirements by interviewing
and other assessment techniques. The recruitment process also
includes the making and finalising of job offers and the induction
and onboarding of new employees.[1]
Depending on the size and culture of the organisation recruitment may
be undertaken in-house by managers, human resource generalists and /
or recruitment specialists. Alternatively parts of all of the process might
be undertaken by either public sector employment agencies, or
commercial recruitment agencies, or specialist search consultancies.