Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
HEG Limited (NSE: HEG) Q4 2026 Earnings Call dated May. 04, 2026
Corporate Participants:
Ravi Jhunjhunwala — Managing Director and Chief Executive Officer
Manish Gulati — Head, Marketing
Ravi Kant Tripathi — Chief Financial Officer
Analysts:
Rajesh Majumdar — Analyst
Ahmed Madha — Analyst
Amit Lahoti — Analyst
Rohit Prakash — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the HEG Limited Q4FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Majumdar from 361.
Please go ahead.
Rajesh Majumdar — Analyst
Yeah. Good afternoon everyone and welcome to the Q4FY26 Agg Limited earnings conference call. We have with us today the management team represented by Mr. Ravi Jinjanwalaj, Chairman Managing Director and CEO and Mr. Vice Chairman Mr. Manish Gulati, Executive Director Mr. Om Prakash Ajmera Group CFO Mr. Ravitrapati, CFO HEG Limited Mr. Puneet Anand, Group CSO Mr. Salil Bawa Group Head Investor Relations. Apart from this, we have ATG Green Tech team as well. For any queries on that, with much ado about on this, I hand over the call to Mr.
Ravi Jindwala, Chairman, Managing Director and CEO. Over to you sir.
Ravi Jhunjhunwala — Managing Director and Chief Executive Officer
Thank you Rajesh and good afternoon everyone and welcome to our financial results conference call for the fourth quarter and full year 2526. Let me begin this discussion with some broader industry contracts. Context. According to World Steel Association, Global crude steel production in Q1 January March 2026 stood at around 459 million tonnes marking a decline of roughly 2% year on year while registering a sequential recovery of about 8% versus Q4 of last year. This is mainly China driven. We have seen this phenomena of higher production in the last quarter of the year by China a lot of times in the past.
And this normally tapers down to more reasonable levels as we come to H2. China typically follows a cyclical production pattern which output moderating in Q3 and 4 to align with environmental and policy targets, which is close to about a billion tons of steel production followed by a strong restart in Q1 practically every year. Excluding China, global steel production stood at approximately 212 million tonnes in Q1 2026, which is a decline of about 1.3% over Q4 2025. Among some key steel producing regions.
India continues to be a standout performer recording around 5% quarter on quarter growth supported by strong infrastructure and construction activities. The US too saw a modest growth driven by steady industrial demand, while Europe remained relatively muted.
Manish Gulati — Head, Marketing
Japan, Brazil and several other
Ravi Jhunjhunwala — Managing Director and Chief Executive Officer
Large steel producing countries were broadly flat to slightly negative, reflecting ongoing softness. China continues to face domestic demand pressure resulting in elevated export levels. Chinese steel exports are now running at over about 100 million tonnes on an annual basis which continues to impact global pricing and drive increased trade protection measures worldwide. At the same time, current geopolitical tensions amid conflict in the Middle east are contributing to volatility in energy markets and supply chains.
We are clearly witnessing an acceleration in the regionalization of steel trade driven by rising protectionist measures globally in response to structural overcapacity, particularly in China. Measures such as Section 232 in U.S. Antidumping Safeguard Actions in Canada, Mexico, India, Brazil and similar steps across other regions are reshaping trade flows in Europe. Carbon Border Adjustment Mechanism, generally called cbam is a key structural change. By imposing a carbon tax on imports of steel, it incentivizes lower emission steel production or export which is only possible through electric outfoilers.
In parallel, the EU’s upcoming tariff rate quota regime coming as early as 1st of July 2026 is expected to further restrict steel imports into EU and thus increase its own steel production which has seen a decline constantly quarter after quarter. This is particularly significant for electric arc furnace steel making. Excluding China, about 50% of steel is already produced through electric car furnace and the share is expected to rise further given its significantly lower carbon intensity compared to glass furnace basic oxygen furnace routes.
Under cbam, reduced exports of steel to Europe are expected to increase favored electric ark furnace based steel due to its carbon footprint advantage. As a result, we expect a structural and positive change in electric arc furnace steel production with a strong pipeline of new capacity additions of electric arc furnaces globally. This directly supports long term demand of demand growth of graphite electrodes.
Ravi Kant Tripathi — Chief Financial Officer
To
Ravi Jhunjhunwala — Managing Director and Chief Executive Officer
The best of our knowledge, about 20 million tonnes of new greenfield electric car furnaces have already been commissioned in the last 12 to 18 months all over the world and we believe an additional 60 million tonnes are at different stages of implementation which should be in production by 2028 and another about 30 million tonnes by 2030. The total new installations of electric arc furnaces all over the world except China would thus be a little over 100 million tonnes. This kind of a growth in electric car furnace based industry is unprecedented in the history of the steel industry and is expected to translate into incremental electrode demand of around 200,000 tonnes by 2030, excluding China.
And we are very well placed to meet some of this new demand with our recent expansion from 80,000 to 100,000 tons. And as you are aware, we have already announced our next expansion to 115,000 tons which is likely to be operational by early 2028. In this backdrop, our focus on operational efficiency, cost discipline and customer diversification has enabled us to deliver a resilient performance during this quarter. We continue to operate at healthy utilization levels which is probably the highest all over the world, averaging more than 90% for the whole year as well as the past three four immediate quarters.
And this is based on our expanded capacity of 100,000 tons, reflecting strong operational efficiency, low cost and disciplined planning at our plant near Bhopal. Our plant near Bhopal remains the largest single site location of electrode plants anywhere in the world with a capacity of 100,000 tons, which makes us one of the most competitive cost companies due to its size and location in India. Looking ahead, we remain confident of the long term growth opportunity for our company. Construction of the additional 15,000 tonnes expansion is progressing as planned and we continue to target completion by early 2028.
This will further strengthen our ability to serve incremental global demand at a competitive cost. To summarize, while near term conditions remain mixed, the structural shift toward electric as furnace steel making, supported by decarbonization policies and trade realignments in the world continues to strengthen the long term demand outlook for electrodes. And with our scale, cost leadership and high utilization levels, we believe HEG is very well positioned to benefit from this transition. I would like to clarify a point on our investment in KraftTech.
I would like to reaffirm that our position remains unchanged. This was undertaken as a deliberate long term investment and our conviction continues to be anchored in the structural foundations fundamentals of this business rather than near term market movements. Cyclical volatility is intrinsic to this industry and interim fluctuations in no way alter our outlook or our resolve. We remain fully committed to this investment and we are confident in the long term value it will create for our stakeholders.
We are pleased to inform that the composite scheme of arrangement is progressing well. The NCLT convened meetings of the equity shareholders, secured creditors and unsecured creditors of HEG are scheduled for Tuesday 5 May to seek their approval of the same subject to shareholder, creditor and other regulatory approvals. We anticipate that the scheme could be approved by the LCIT sometime in the second quarter of this financial year. With that I would now like to hand over to our CFO Ravish Depathi to take you through the financial performance for the quarter.
After which we will open the floor to the question and answer.
Ravi Kant Tripathi — Chief Financial Officer
Thank you, sir.
Ahmed Madha — Analyst
Good afternoon everyone. Thank you for joining us. I will briefly explain our performance for the quarter end and for the full year ended 31st March 2026. Compared to last year, we have shown strong growth in volume as well as in revenue. Our sales volume increased by 20% which helped our revenue grow from rupees 2153 crore to rupees 2569 crore. Total income also increased to Rs. 2,660 crore from rupees 2279 crore. Our EBITDA increased from rupees 388 crore. Rupees 497 crore. With margins increasing from 17% to 19%.
Our operating margins remained stable in the range of 15 to 20% during the year with more than 90% capacity utilization during the year Pvt. Has increased from rupees 148 crores to rupees 246 crores which is a growth of 66%. Net profit also increased from rupees 101 crores to Rs. 181 crores. This improvement came from higher volumes, better control on input cost and focused monitoring on all fixed costs. The company remains financially strong with no long term debt. As of 31st March 2026, it had a treasury of around Rupees 792 crores.
Coming to the quarterly performance, we reported a loss of rupees 189 crores. This is mainly attributable to unrealized losses arising from share valuation, impact on foreign investment and rapid depreciation of rupee which led to 5% within this quarter. These are entirely unrealized losses and we have taken impact of them in the books as per the applicable Indian accounting standards. Excluding the unrealized losses, our operating margins for the quarter is intact and is reasonably comparable with the previous quarters.
The Board of Directors has recommended a final dividend of rupees 3.4 per equities here. Face value of rupees 2. Subject to shareholder approval at the upcoming annual general meeting. For more details, the full presentation is available on the company’s website and the Stock Exchange. We are now happy to take your questions. Thank you. Over to you, Rajesh.
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and then One on the other. Strong phone. If you wish to remove yourself from the question queue, you may press star. And two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Amit Lahoti from Aditya Birla Capital. Please go ahead.
Questions and Answers:
Amit Lahoti
Good afternoon. Thanks for the opportunity. My first question is on pricing. So during the quarter Graftech announced a price hike and we are getting a sense that there is a growing customer acceptance around the price hike given that the electrode cost is now less than 1% of the steel prices. So if you could quantify how much price hike we are looking to take starting from this financial year. And then is there a similar cost increase for Needle Coke as well?
Ravi Jhunjhunwala
Manish, will you take this question? Yeah.
Manish Gulati
Yes sir. Amit, as you know we book orders that say three to six months. So as we speak we are about booked almost until September. And for the unbooked orders we are definitely looking at price increase. It depends from region to region how much price we can get. And also I would say that we already have some increase in cost due to these energy freights. So the price increase is very necessary to be done. How much will be the quantum? Whether it will be 300, 400, 500 is very difficult to say at this stage.
How much every region steel companies are able to absorb and also what our competitors are doing at this stage. But definitely towards H2 there has to be. Our aim is to have price increase not only to protect our margins but to help improve further.
Amit Lahoti
Okay, but does it implicitly mean that we are going to have some cost impact in the first half of the year even before the price hike rolls in?
Manish Gulati
It will be there, but not to that extent because you see some of these energy prices and because of our long longer product cycle. Let’s say for example if gas prices are going today or furnace oil are going today, but when they will. Actually those products are made in two months and get shipped. So there’ll be a lag in that. But yes, certainly there’ll be some price increase. I mean some cost increase. Sorry.
Amit Lahoti
Noted. And my second question is on Green Tech, particularly for tscc, where are we in terms of customer qualification process and how fast can we ramp up once it gets commissioned? Basically my question is are there any technology or qualification bottlenecks that are left to be resolved over the next six to 12 months?
Ravi Kant Tripathi
I can think.
Rajesh Majumdar
Yeah, you can answer this directly then.
Ravi Jhunjhunwala
No, he doesn’t seem to be There you go ahead.
Rajesh Majumdar
Okay, so in terms of the customer acquisition, I mean you are aware that we had set up our pilot plant for sampling etc more than 18 months back. And you’ll be very happy to know that we’ve made very, very good progress with all the leading OEMs across the world because Indian cell capacity is delayed as it seems. But we are actively working with all the Indian ones as well as the companies like lg, Panasonic, Catl, etc, where we are in different stages of sampling. But you know, those sampling works are going extremely well as well as the plant commissioning.
There is no change in the plant commissioning date from April. And we hope that, you know, in the first year itself we’ll be able to have a decent 40 to 60% kind of capacity utilization because of the customer listing acquisitions that are going on right now. So there are no issues on technology that we are facing currently.
Amit Lahoti
Okay, noted. Thank you so much. Thank you.
Operator
Thank you. The next question comes from the line of Rajesh Mazumdar from 361. Please go ahead.
Rajesh Majumdar
Yeah, good afternoon again, sir. I wanted to know the sales volume for the quarter and why the revenue is lower. Is it because of lower realizations or lower sales volume?
Manish Gulati
Yeah, Rajeshi, about this Q4, there are slightly less volume to the tune of I guess about a thousand tons and some depression in price. But that is only because of our regional sales mix. See, we are, we are shipping to 40 countries. So which, which, which lots, which customers, where they’re going. But there’s no depression in price per se because in the market it’s just because of our size mix and order mix which goes quarter on quarter. So this quarter we had some low price orders going which dragged down price a little bit.
But that’s in April, May, June, you will see it quickly coming back up. So it’s very temporary. So that did cause some dent in the operating profits.
Rajesh Majumdar
Just a related question, is there any disruption because of the Middle east and what proportion of sales are we selling there?
Manish Gulati
Annually we do about 20% sales in Middle east and MENA region, Middle East, North Africa. Yes, absolutely there’s a disruption. The orders which we had from all these customers like Kuwait and Saudi and they all have to be postponed. So instead we had orders from other customers. So they are being given precedence. So they are going now. And as soon as the state of Hormuz opens and business normalizes the pending orders which we are holding for Middle east, they will also quickly be shipped.
Rajesh Majumdar
And sir, one more question from my side is that we’ve seen a huge rally in crude oil. So that will impact the needle coke prices. So as you’re, you’ve covered till September, you said on your contractual side, are you covered for the needle coke side as well? How much are you covered for and how much will that cost increase percolate to us? From which half and will the price increase happen simultaneously with that? Yeah,
Manish Gulati
You see we are covered for needlework purchases and needlework shipments starting from the original still end of June. So by the time they arrive, they take 45 days to arrive. And our electrode product processing is another 45 days. So it safely covers our costs until September. From the needlework side, however, it doesn’t protect us from the other materials which we get from India or doesn’t protect us from energy. But purely on the needlework side, we remain protected until September.
Rajesh Majumdar
Okay. And so one strategic question, one last question from my side is that do you see the rise in gas and energy prices as an impediment to the electric arc furnace and the CBAM theme? Because as I understand that the energy requirement in electric arc furnace is almost nearly three times more than that of a blast project. Yeah,
Manish Gulati
You see these energy prices actually depends in Europe etc. How much. See their power is a major cost for electric arc furnace steel plant. So that energy and the mix of power generation which they have in Europe and US, I don’t think it’ll cause any direct hit to electrical furnace steel making economics because they are, it depends on power at what price they can get the power in their country. So there may be some indirect connection. But there are gas based power plants, but they’re more in Middle east rather than in US or Europe.
So maybe there’s some marginal impact but doesn’t change anything actually.
Rajesh Majumdar
And CWAM is on track, there is no derailment of that.
Manish Gulati
CWAM is applied already. Actually they will see a reduction in steel imports in EU which will encourage the local steel plants to run at a higher utilization and high demand of graphite electrode from Europe.
Ravi Jhunjhunwala
Okay, thank you sir. Just to add, these European steel companies basically have no option. I mean as you all know, electric arc furnace emits about 25, 30% of carbon as compared to the same steel produced through glass furnace. So with the CBAM and X€ per ton demand, I mean duties and everything that Europe is applying now from 1st of July, whether the cost is X or X plus something, they will have no option. I mean there is no way that they can pay that kind of C band duty and still be able to export their steel.
So they’ll have to shift from blast furnaces to electrical furnaces already. I mean Europe is already 50, 55%. And Europe is adding at least 25 to 30 million tons of electric arc furnaces. Some of them have already come in, some of them are under construction. So by 2030, according to our information, and we believe this figure is more or less accurate because we are exporting 70% of our products to all parts of the world. So people are always on the road meeting this customer here and that customer there.
So close to 100 million tons of new electric car furnaces are scheduled to come in, out of which 2022 are already in operation. And we believe about 30 million tons is going to be operational within 26, 27 and 28 and another 30, 35 million tons in 20, 28 and 30. So that adds up to about 100 million tons. That will require a lot of electorates. And except our expansion, there is nobody who has even announced anything as yet. It takes two to three years to even make a small brownfield expansion. As you know, in our case.
Operator
Thank you. Thank you. The next question comes from the line of Ahmed Madha from Unified Capital. Please go ahead.
Ahmed Madha
Thank you for the opportunity. Just picking up from the questions you answered
Rohit Prakash
Before
Ahmed Madha
My turn for Q4. If you can quantify what was the sales volume we have quoted 94, percentage capacity utilization. But in terms of fields volume compared to last quarter, you can quantify how many thousand tons have been impacted because of logistics or any other reason.
Manish Gulati
Yeah. Did I say a thousand tons? Almost between Q3 and Q4, hardly a thousand tons got impacted because these orders, mid lease orders had to be postponed.
Ravi Kant Tripathi
Okay,
Ravi Jhunjhunwala
Postpone, you divert it, you will divert it here and there. Either
Manish Gulati
Diverted. See most of it, most of the postponements were diverted. And there’s an impact of only a thousand dollars less in Q4 compared to Q3.
Ravi Kant Tripathi
Okay.
Ravi Jhunjhunwala
And Manish, as you were telling me, I mean, because the situation is so desperate, you see, the steel companies in the Middle east are desperately placed as far as the raw material and everything is concerned. They don’t want to float their plant and they are prepared to pay 200, $300 extra for electrode to be sent by road instead of 20, $30 cost that we were incurring to take the electrodes to any Middle Eastern countries. I believe there is a way that you can take the electrode to some Middle Eastern port by ocean.
Then it takes as much as 2 to $300 to truck it down to the location of the plant and they are prepared to pay for that. I mean obviously $300 per tonne of electrode means nothing to them rather than choosing the steel plant.
Ahmed Madha
Correct? Sure. Got it. And in terms of pricing, as you said you are already booked till September but I’m assuming post September contracts you will be probably doing now or maybe a few months down the line. So in that renewed committed volumes do you see any significant price increase or are you already into those conversation office increasing the price? We can probably give some qualitative and quantitative commentary from the same
Manish Gulati
People. All the new inquiries we are receiving now, we are pricing it accordingly. We are taking into account how much our costs have increased and some price increase was anyway necessary. So we are with every. All inquiries don’t come in one go. They keep coming every two days, three days, one week, 10 days. Every customer has their own buying ways. So we are offering increased prices in the market and we are quite hopeful that some amount of the price increase should get absorbed and see the industry should be willing to do that.
But it also depends on what our peer group is doing, how much seriously they are pursuing the price increase. So we will see. But we have started offering increased prices for the uncommitted volumes.
Unidentified Participant
And in terms of.
Operator
Sorry to interrupt. Ahmed. Sir, may we request you to. Thank you. Our next question comes from the line of Pandey. Please go ahead.
Ahmed Madha
Yeah. Hi. Am I audible sir?
Manish Gulati
Yeah,
Operator
Yeah you are.
Ahmed Madha
Yeah. Thanks for the opportunity sir. And although I understand the old investment rationale and the know tailwinds, multi tailwinds that we have but just some nuances that I wanted to understand from you. So needle capacity, supply is a constraint that we have in our industry. Now that capacity, the demand for that is from our industry as well as from the anode industry. Now when we are saying that we are adding 120kt of you know, incremental demand so. And again there are reports of around 100ct of addition of demand from anode site.
Now somewhere down the line the whole map is not adding up to the existing needlework capacity and then there are no recent capacity additions also happening in the needle cooking. So I just wanted to understand how are we going to fulfill the 120 KD of demand given the fact that we are also not backward integrated like west players. So some light on that from your side.
Ravi Jhunjhunwala
I’ll tell you a little bit. I mean it is motivating me to tell you something which somebody asked and we didn’t answer that question very clearly. The only reason that we Decided to invest whatever we invested to buy Graphtec shares was primarily because that is the only graphite company in the world who is 75 to 80% backward integrated. I’m talking of Graphtec. That’s the only graphite company who has a needle coke plant of its own to the extent of about 75% of their own capacity. So if you go back to five years ago, six years ago, when the electrode prices went up by 3, 4, 5 times over a period of time, the same thing happened with needle coke.
And the needle coke prices went up from about $1,000 to about $4,000 in a matter of five, six, seven quarters. Graftec was the only company which had about 80% of their captive requirement is being met by their own coke plant. So while they made a lot of money like all the other graphite companies made because of price increase on electrodes, but they were in a unique position that they made an additional $2,000 to $3,000 on the needle cork while people like us or the Japanese or Graphite India or anybody else except Graftec had to pay, had to buy needle Cork at about $3,000 to $4,000 higher than what it used to be in a matter of less than a year.
So our logic of buying these shares about two years ago, one and a half year ago, was simply this. That if and when we see the same time and the same days as we saw five, six years ago, when electrode prices will go up and backed up by needlecoke, while all of us, all others, except Graphtec, will make a lot of money in electrodes. But this is the only company in a unique situation that they will not only make money on electrodes, they’ll also make a lot of money on needlecore. So this was a very simple logic for which we invested.
And of course, I mean in the stock market you can never be 100% right or you can never be 100% wrong. So at the price when we started buying, it was, it looked like a steal and it did go up by 30, 40% and we decided not to sell and it went down by 30, 40%. It has recovered a lot in the last two, three months. But again, it’s just a matter of time. I mean, as soon as we see some uptick and some of these 100 million tons of electric car furnaces starting operations, which some of this has already started, as soon as we see that we see a shortage of electrodes, we see if there is a shortage of electrodes, there will be a short term needle for sure.
That was a simple reason that we were looking at. We went ahead and invested that money.
Ahmed Madha
Understood. I get your point sir. But according to Graph tech, like the 120 GT of extra, extra demand that we have seen. So if I’m not wrong, they have mentioned that currently of around 650kt 1/3 has already been supplied by Chinese players. Now this is not what I am saying. I guess this is what Graphtech is saying and this is in the UHC market. So I mean all the quality issues are there. But what do you read from this? Because incrementally like can we get market share in this 120kt or like Chinese players are also increasing.
What
Ravi Jhunjhunwala
The, what is this, what is this 120000 tons supply that you’re talking about?
Ahmed Madha
No. So if you go to graphics commentary in the annual report, they are mentioning that around 1/3 of existing 650kt of demand that is there in the graphite electrode market currently is met by Chinese layer that is bringing down the overall capacity utilization of the industry to 60 to 65%. Now my question is that what’s stopping them from doing the same in the incremental 120kB of capacity that’s coming, that’s required.
Manish Gulati
See, can I answer this question? What you’re saying what in their commentary we can’t say what. I mean they have their own reasons and logic to say that 120,000 tons of UHP is being supplied from the Chinese, which is fine. You see uh, in uh, in China is exporting lot of electrodes and predominantly they are all the high power grade. But yes, we will not deny that they do not export UHV electrodes. They do export UHV electrodes of almost the same order. We believe it’s probably 100,000 out of the 4,400 thousand they export.
And in the low powered furnaces and sizes that say up to mostly up to 24 inches, they’re definitely doing that. And of course in their phone call talks about China they, they’re talking about impact on them. So they talk about China. They also talk about India which is fine and the capacity utilization. They are running whatever, whatever is written there, 65 or something in the last quarter. But please remember the TV is running at 90 plus. So they have to explain for themselves and we have to talk about ourselves.
So they’re explaining, they have to explain to their stakeholders why they are at this. So they are giving this reason, which is fine, which is totally fine. But the you are saying what is stopping Them see if you’re talking about hev we are a very I would say a very cost competitive plant because of our size and our location being in India and so our structurally our costs are lower. So we when in our calls we don’t mention that because of Chinese so many UHV exports we are being dented.
Operator
Thank you.
Manish Gulati
Right,
Operator
So we have the next question coming from the line of Mr. Manan from MKP Securities. Please go ahead
Ahmed Madha
Sir. Thanks for the opportunity. So first question on again the quarterly number that’s come out. You said there are unrealized losses in the investment and that’s been the reason driving the loss. If you could like quantitatively tell us if we pull out the graphneck loss and the loss on the forex instruments is there a shipping cost hit also that is large in the other expenses jump that has happened this quarter. And secondly if you could tell me from your contracts when you have a fixed price contract say six months ahead, is there a force where you are clause within it above a certain level of oil price or shipping prices per se?
Manish Gulati
No. I’ll answer the last question first. You see in particularly in Middle east where freight costs shot up from $2030 to more than 300. Of course we had to tell our customers and we did send letters of force majon wherever we are impacted, see some little bit cost increase it is expected that supplier will be up. So anything out of the ordinary of course we have the right to go to our customers and tell them and we did that for Middle east and they are taking material fob Mumbai and they’re paying for the extra freight.
But we the freights have also increased for US and Europe but they are not yet of the order that we go back and breach our contract or request them because it is still absorbable. See once you book the book a six month contract there’s some cost which will go up and down throughout the execution of the order. It can go up 5% so it is expected it sometimes gets lower because for us needico pitches energy, I mean electrical power, they’re all, they’re our major costs. So during a course of six months when we commit to a certain price, unless something goes really wrong, we don’t usually approach our customers and you know, ask them for a price increase because they can do it do it likewise suppose they keep track of our essential raw materials and if the price goes down a shade they don’t come back to us to ask for a renegotiation of the contract.
So we try to do as much Visibility we have. If we have a three month, three month our need go get tied up and electrical power is tied up then we take a safe call as to how much. But during the course of time some increase decrease does happen.
Ahmed Madha
Right Sir. And on the first question with the other expenses.
Rohit Prakash
Yes.
Ahmed Madha
In other expenses if you see, if you compare with the previous quarter and you can see that we have added the whatever the fair values and losses we have added in the other expenses. That’s why the other expenses is looking higher as compared to the previous quarter.
Unidentified Participant
That’s in your note. I’m just. Apart from that there is a still large jump that has not been disclosed in the note. If you could just quantify
Amit Lahoti
Some of that for us.
Ahmed Madha
So the. Another, another some impact of the exchange gain loss during the quarter due to the rapid rupee depreciation. As I said in my initial opening remarks that approximately 5% rupee depreciated within quarter. That impact is also. Is there. So that’s why the other expenses is higher as compared to the previous quarter.
Amit Lahoti
Thank you. Thank you so much.
Operator
Thank you. The next question comes from the line of Mr. Raj Kiran Gandhi from SBI Mutual Fund. Please go ahead.
Unidentified Participant
Hi. Thanks for the opportunity. So possible to quantify this FX loss which is being reflected in other expenses.
Ahmed Madha
Yeah, this is Raj. See this FX loss is completely. Is a unrealized loss that we find in the range of 35 to 40 crores within the quarter.
Unidentified Participant
Okay, got it. And given that rupee has depreciated further from the quarter end so we should expect something next quarter as well. And whereby when will this reverse? Because as you mentioned this is unrealized.
Ahmed Madha
Yes. In case the rupee suppose is appreciate then definitely this will reverse. You can see some reversal in the next quarter.
Unidentified Participant
Okay, got it. And. And any particular reason? Let’s say even if on the gross margin side itself, if I were to look on a part time basis there has been some contraction Q and Q. So any particular reason for that? Or it’s. Yeah,
Manish Gulati
Yeah, explained that. See when this war happened all these orders needed to be shuffled up and down. You know, there was some Middle east orders which didn’t go and some other orders which went so quarter on quarter there’s always a slight movement up and down. And because of this war thing the Middle east orders had to be, you know, postponed till the situation normalizes and some other orders. So it depends which orders are going in which particular quarter. So it’s not a cause of concern. And you will see that coming up in April to June, we are very hopeful that by the time this issues will get resolved because Middle east is next door and we’ll start pushing material as soon as the situation is clear.
Unidentified Participant
Got it, got it. So mixed turned adverse in the sense when Middle east type resume is a better margin geography. So
Manish Gulati
Yeah, yeah, logistic costs are much lower for Middle East.
Unidentified Participant
Okay,
Ravi Jhunjhunwala
No, but the prices can be different. I mean we can’t talk about which which area.
Unidentified Participant
Sure, sure, sure. And just in terms of your opex, how much of it is rupee denominated or and how much is FX denominated? I’m just trying to presume because of the sharp depreciation in rupee, maybe over time how much of realization benefit can come to ebitda?
Ravi Jhunjhunwala
No, our we gain by rupee depreciation for sure. I mean our
Unidentified Participant
Foreign
Ravi Jhunjhunwala
Exchange outgoing only on account of needle cove which is a smaller part compared to the total realization. So obviously we are, we are a net exporter so we gain more.
Unidentified Participant
Right. So just trying to understand what is like x of RM how much of our cost is $denominate which will also then go up along with depreciation and then I’m just trying to understand net net, how much benefit do we retain of the rupee depreciation?
Ravi Jhunjhunwala
Sure,
Unidentified Participant
Sure.
Ravi Jhunjhunwala
We don’t want to talk about specific numbers.
Unidentified Participant
Sure, perfect. Thanks.
Operator
Thank you. The next question comes from the line of AJ Slakhani from Unifi amc. Please go ahead.
Unidentified Participant
Yeah, hi, am I audible?
Ravi Jhunjhunwala
Yeah, yeah you are.
Unidentified Participant
Okay, so thanks for the chance. So I wanted to understand that given that needle coke is also being used in, in batteries and this is again premium or super premium, you know, battery grade material, I want to understand a little bit more about the raw material sourcing and availability and capacities globally. So one is, could you talk about where do you procure your needle co from? What is that manufacturer’s capacity? Are they adding capacity globally? Is needle coke capacity additions taking place?
Only to understand broadly that if, if the demand for needy coke gets re pivoted more towards, you know, towards the battery side, what kind of, you know, scarcity that could do for decarbonization in the air? That’s broadly what I’m trying to understand. Thanks.
Ravi Jhunjhunwala
So I’ll take this question. See about four, five years ago when the electrode suddenly went into a serious shortage and the prices went up by three, four times and so did the needle coke. I mean obviously, so at that time, obviously we talked to all our three, four suppliers of needle coke. So firstly, needle coke is also a very technology based product. And I don’t think there has been any new greenfield needle coke plant put anywhere in the world in last 78 years. And there has not been any new entrant in this last 70, 80 years.
And there are only three, four suppliers in the world from Japan and US. And so what we realized at that time five years ago, when the needle coke prices went up by three, four times, so did the electrode price. At that time we realized that what the price that we can pay for needle coke the battery guys cannot pay. Because I believe in the battery needle coke is one of the maybe seven, eight, nine things which goes as part of their raw material. So needle coke can be replaced by one of these six, seven other raw materials that you can mix.
But for graphite electrode there is nothing that you can do. You have to only use the this particular needle coke which is produced by these three, four companies. So at that time also while we could pay whatever sharp increase happened in the needle coke price, the battery guys could not pay that kind of a price. They had an option to replace needlecoke by something else. And that something else probably is 3, 4, 5, 6 different raw materials. So if they were using 10, 12, 15% of Needle Coke, they replace this 10, 15% of Needle Coke by other 4, 5 products that they were mixing in any case.
And needle coke capacities have not gone up. I mean just like graphite electrodes. If you see the last 40, 50 years of graphite industry in the world, except HEG, there has not been any new expansion anywhere else in the world. Whether it’s India or in Europe or America or Japan. On the contrary, the capacities have shrunk in the last four or five years. So to that extent there was no need for the needle cook guys also to expand. I mean they could not sell whatever they were producing for the last five, seven years.
Unidentified Participant
Sorry sir, if I understand the last bit correctly, you said that the needle cook suppliers were not able to sell their desired quantity for the last four or five years.
Manish Gulati
Yeah, that’s right. I mean it’s, they were underutilized for a while. So if so it’s not, it’s not that battery and electrodes are using exactly the same kind of product. There’s an anode grade Coke which all these companies also make so that the needle go per se. There’s a lack and lacks of tons of demand in for the battery coke. So had it been true that needle cook supplies would be running more than full. But we have seen when the, when the capacity utilization of G industry was down in the last one or two years they had extra capacity to make.
There was abundant supply of needle cook. This clearly shows that it was not exactly going to the battery applications.
Operator
Thank you. The next question comes from the line of Kirtan Mehta from Coroda
Ravi Kant Tripathi
BMC Paris mutual fund. Please go ahead.
Ahmed Madha
Thank you sir for this opportunity. Just one follow up question again on the middle you mentioned that we haven’t seen any material increase in graphite electrode.
Ravi Jhunjhunwala
Amit,
Ravi Kant Tripathi
Excuse me, are you there?
Ravi Jhunjhunwala
Are we. Are we disconnected or what happened? Manish?
Manish Gulati
Yes, I’m there sir. Amit was asking some question when he disappeared.
Ravi Jhunjhunwala
So either he is disconnected of or you and us are disconnected.
Rajesh Majumdar
No, I’m also there. So I’m also connected.
Operator
Sir, all the lines are connected.
Rajesh Majumdar
Okay,
Ravi Jhunjhunwala
So maybe we lost Amit.
Ravi Kant Tripathi
Yes sir. Just give.
Operator
Sir apologies for that. The previous questioner’s question has been dropped. We have the next question who. Which is coming from the line of Mr. Rana Kazarwal from. I thought PMS. Please go ahead sir.
Ahmed Madha
Yeah, hello.
Operator
Yeah, go
Ravi Kant Tripathi
Ahead please. Hello?
Ahmed Madha
Yeah,
Operator
Go ahead.
Unidentified Participant
To be
Ravi Kant Tripathi
Get
Unidentified Participant
Fully.
Operator
I’m sorry to interrupt. Ronak sir, your line is not very much clear. If you’re using any other mode. May we request to use the handset please? So you’re sounding muffled and slightly distant right now.
Unidentified Participant
Hello?
Operator
Yes sir, this is much better. Please.
Unidentified Participant
Yeah, so Graphtech if Graph. Graphtech has taken a price of around $612,00. So by the end of this current financial years for FY28 volumes can we expect a full price hike to be seen in our volumes also?
Manish Gulati
Uncommitted volumes? Sorry. Yeah,
Ravi Jhunjhunwala
I hope by Graphtech or we announcing that we are taking a rise of $612,00. I wish the market behaved. The market accepts whatever we are talking about. I mean it’s one thing to say that I want to do this and there’s always the other side who negotiates with you. And in this business as you know very well, it’s a very. It’s a very long process. Very long process driven industry. Some products take the minimum time taken to produce electrode is about two, two and a half months. And the longest time takes as much as four to five months.
So obviously in this kind of a business we have to take orders at least for the next three to six months. Otherwise we can’t even meet the delivery schedules. And then if you are exporting 70% to more than 30 countries it takes time for the products to reach America. America will take 40, 45 days to reach. So we are Committed on a certain price for a certain period of time. And similarly we are also committed to buy needle coke for a certain period of time at a fixed price. So there is a time lag between when you announce that you are taking a price increase and the time that you start getting it.
Ravi Kant Tripathi
Yeah, yeah, sure. Get it from us. Thanks.
Operator
Thank you. The next question comes from the line of Rohit from Marshmallow Capital. Please go ahead.
Rohit Prakash
Thank you for the opportunity. The commentary is always very helpful to understand the industry as a whole. On Meago specifically we mentioned that we have supplies till June, which will last us till September given how the manufacturing work. But is there any indication as to, with the Middle Eastern crisis going on, how much, how much of an increase we are seeing in coke prices right now? Because I’m guessing some amount of negotiation would have begun for the next shipment. Right.
Manish Gulati
So far there is no indication, we have not heard from them. And maybe in the month of June or maybe by the 15th of June or something when we actually sit down and discuss the next quarter’s contracts, I don’t know what they will come up with.
Rohit Prakash
Understood. But with the crude price increase and raw material is a derivative, there should be a price increase, is that correct?
Manish Gulati
Yeah. It eventually comes from oil, it comes from decant oil. So when oil goes up, of course they are impacted and we’ll see how the oil prices are behaving. They might come down, they might stay where they are. So probably the right time when we come to actually know of it will be in sometime in the middle of June.
Rohit Prakash
Thank you. The second question is in the opening commentary, Chairman sir spoke about the regionalization of trade even in our industry. Right. So how, I mean, so there is a lot of protective measures, including the C band measures in Europe and then there is talk of countervailing and anti dumping duties in US against India and Chinese imports, which apparently they expect to see an outcome by September. So in this increasing regionalization that’s happening, how do you see our volumes over the next two, three years?
Do you think it would affect our volume that we can expect or it won’t impact us because of our cost competitiveness?
Ravi Jhunjhunwala
I think it all depends upon how the whole thing goes. I mean we, I mean obviously we have taken a very strong law firm from India and we have taken a very strong law firm in US and they’ve taken all the data and everything from us and we’ll know in the next four, five months as to what happens. But we don’t think that we are doing something seriously Wrong. At least in America where our pricing is amongst the highest. But it’s a matter of legalities. I mean we’ll see what happens. But the whole world is becoming very protective as we, as we have seen in the last 10, 15 years.
Rohit Prakash
All I can
Ravi Jhunjhunwala
Say is that we are the lowest cost producer. So to some extent, if they, if they are these duties or taxes, whatever you want to call is, that’s at a reasonable level, we can probably absorb it.
Rohit Prakash
Understood, that was helpful, sir. And the price increase you spoke about, I mean the primary driver of price increase for us in the graphite electrode industry would be driven by the cost increases related to what’s happening in Middle East. There is no other reason why there is a size increaser. Is there something else driving the price increase?
Ravi Jhunjhunwala
No, they’re faster, much higher than ours. So it’s not just a Middle east problem. I mean even before the Middle east problem, if you go through the quarterly results of all the meanings that there are only two, three international companies, so they have been losing money pretty big time even before the war.
Rohit Prakash
So I mean my confusion is more around why now? Right, so this, what you’ve been seeing has been going on for three, four years probably. But around this time is the crisis more a coincidence or is it the, I mean is it the nuts that the market needed to increase prices why this year and will it continue over the next year? And is it difficult to answer these questions given the volatility?
Ravi Jhunjhunwala
What exactly was your question when you said why now?
Rohit Prakash
No, so what you said about see capacity has been. The supply has been shutting down in the industry over the last three, four years. The losses in Graphtec and the Japanese players have been going on for two, three, four years. But we are seeing finally price increases potentially happening now in the graphite to. So what is driving the price increases to happen this year and will it continue over the next year or is it too difficult to answer this question?
Manish Gulati
Graphite electrode industry was looking for a price rise not from now, for the last almost two years because this is unsustainable for them. For the, our peer group incurring losses quarter by quarter was unsustainable. So everybody was hoping for things to turn around and price sizes to happen. But if you say why now? Probably is the last draw on the camel’s back that now with this additional Middle east thing, war, it’s, it’s not totally unsustainable for them. So I think this is, this was the right time, if not now, then when it’s like that.
But as you said about the timing then I should say that all of us including HCV were looking for a price increase to happen for last quite a few quarters and it didn’t happen. And overall over and above now there’s a Middle east situation, rise in energy, rise in freight. So the last on the camels fact.
Rohit Prakash
Thank you for your answer, it’s been very helpful. Thank you so much.
Operator
Thank you. Your next question comes from the line of Akhilesh from M3 Global. Please go ahead.
Ahmed Madha
Yeah, hi. So my first question is on the utilization of Defy teleport. So how much exactly it has been for the fourth quarter because
Rohit Prakash
You know, as we say the volume is only affected with thousand tons but it does not reconcile with the QT
Ahmed Madha
Numbers because in Q3 we had said that 85% utilization is there. So on my numbers it is coming at around two and a half thousand tons for the quarter difference. So can you please explain that?
Manish Gulati
See the capacity utilization when you say we are talking about production, how much we produce and then the sales wise. So if you strictly talk about capacity utilization on production, actually it’s 95% for the quarter, sales wise it is. It is less than that overall for the year it is more than 90%.
Ahmed Madha
Okay, so on production wise two and a half thousand tons of number the difference what I’m getting is correct. So on the sales volume we are down thousand tons.
Manish Gulati
Down thousand tons, Absolutely. Okay,
Ahmed Madha
Sure. And the second question is that why other income has gone down during the quarter? Does it only constitute the interest income or any other part of income is also included in this. And how should we see it going ahead
Rohit Prakash
For this on quarter? On quarter basis?
Ahmed Madha
Yeah. The other other income in the quarter is. Yeah, income in the quarter is lower due to the loss in the. The fair values and loss which we have classified in the other expenses. That’s why the income is coming in the quarter is lower side as compared to the previous quarter. And going forward it will be in in the same line as we are in the previous quarter.
Rohit Prakash
Okay, okay. And lastly
Ahmed Madha
Sir, from my end Last quarter in Q3 we had guided for the sustenance of EBITDA margin of around 22% for the next couple of quarters. Since really in Q4 because of all these Middle east batches we could not sustain that kind of margin. So how should we see it now going ahead for the quarters and for FY27 28? If we could shed some light on that,
Manish Gulati
According to me in the first two quarters, April to June, July to September, see all along these quarters we have been, as Ravi party said, we’ve been between 15 to 20 and we have closed this year also at 20. Now these two quarters where we have committed volumes should be around again around maybe around 17, 18 or something. I can’t hazard a guess. It depends upon what happens in the balance of the quarter should be around that number. If you want to correct me, please go ahead.
Ahmed Madha
Correct. So the range will be. The beta range will be the 20% we can say for the next first quarter and to second part of it. And for the full year it will be more than 20. Is it good to say that? Yes.
Manish Gulati
Should we?
Ahmed Madha
Yes.
Manish Gulati
Should we?
Ahmed Madha
Yeah. That’s it for me. Thanks.
Operator
Thank you ladies and gentlemen. We will take that as the last question for today. I now hand the conference over to Mr. Ravi Junwala for closing comments.
Ravi Jhunjhunwala
So I guess if there is no. No further question. So let me thank all of you for taking so much of interest and asking us some very, very, very probing questions. Probing queries. And this forces us to think about answering all these things which will a couple of things maybe we would not think about otherwise. So thank you very much and I hope you continue to ask us these uncomfortable questions and we are able to satisfy you. Thank you very much and I look forward to meeting you again in three months time.
Thanks.
Operator
Thank you members of the management, on behalf of HEG Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your line.