HEG Limited

HEG Limited announced a composite scheme of arrangement to demerge its existing graphite electrode business into a separate listed company (HEG Graphite Limited) and form a new listed entity, HEG Greentech Limited, housing its integrated clean tech business. This strategic move aims to unlock value for public shareholders by creating two focused companies, each with clear strategies, governance, and capital allocation discipline. Post-implementation, the current HEG Limited will be renamed HEG Greentech Limited, and the demerged graphite business will be renamed HEG Limited.

The new HEG Greentech is being built as an integrated clean tech platform operating across four synergistic pillars: advanced battery materials, RE power generation (solar and BESS IPP), battery energy solutions (REPlus), and hydroelectric power. This platform is designed to capitalize on India's accelerating decarbonization and electrification agenda, with a primary focus on storage as a core technology. The company targets a healthy at least 20% IRR across these four different businesses, which have distinct growth drivers and risk profiles.

HEG Greentech is establishing a 20,000 tonnes per annum (TPA) active anode material manufacturing facility under TACC Limited, with plans to expand to 30 kTPA and then 60 kTPA by FY32. The plant, currently 30% complete with 30% cash outflow and over 50% Capex committed, is expected to be operational by April 2027. Management projects a 30% EBITDA margin for this business, driven by competitive power costs and demand for non-Chinese suppliers, targeting a sales mix of 70% EV and 30% ESS.

The investee company REPlus, a leading battery energy solutions provider, has commissioned over 100 MWh of capacity and has over 2,000 MWh under execution. It aims for a ₹6,000 crores topline for 6 GW capacity. HEG Greentech is also building a storage-led IPP platform, having secured a 200 MWh BESS project in Gujarat and being the L1 bidder for a 1000 MWh standalone BESS project in Maharashtra. The IPP strategy involves a 'build and flip' model, targeting 16-20% IRR and divesting assets to InvITs once stabilized.

HEG Greentech's existing hydroelectric projects (Malana and AD Hydro) consistently generate over ₹300 crores in annual EBITDA with 80% margins, providing stable cash flows. The company recently acquired a 49% stake in these hydro assets from Statkraft for ₹1,205 crores. Additionally, a conditional agreement is in place to acquire a 76 MW hydroelectric project in Uttarakhand, with completion expected within two and a half years after securing necessary approvals, further strengthening the hydro portfolio.

HEG Greentech plans a total Capex of ₹4,300 crores by FY27, escalating to ₹7,700 crores by FY30, primarily allocated to anode material and RE power generation. The equity requirement for this growth plan is estimated at ₹2,300 crores. The company is well-funded, leveraging existing cash, surplus from hydro assets, and a ₹500 crore investment from Singularity, providing approximately ₹5,000 crores for investment. Post-demerger, HEG Greentech is expected to start with zero net debt, while the graphite business will carry the existing consolidated debt of approximately ₹500 crores.