Ladies and gentlemen, welcome to the HEG Limited Q2 FY 2023 earnings conference call organized by SKP Securities Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin B. Agrawal, Head Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir. Good afternoon, ladies and gentlemen. It's my pleasure to welcome you on behalf of HEG Limited and SKP Securities to this financial results conference call of the leadership team at HEG Limited. We have with us Mr. Ravi Jhunjhunwala, Chairman, Managing Director, and CEO, along with Mr. Riju Jhunjhunwala, Vice Chairman, and their colleagues, Mr. Manish Gulati, Executive Director, Mr. Om Prakash Ajmera, Group CFO, and Mr. Gulshan Kumar Sakhuja, CFO. We'll have the opening remarks from Mr. Jhunjhunwala, followed by a Q&A session. Thank you, and over to you, Ravi. Thank you, Navin, and good afternoon, friends, and welcome to our Q2 financial results call for the current year. As you're aware, the geopolitical developments resulting into an ugly war still continues after nine months with no immediate end in sight. This has resulted into changing the dynamics in most parts of the world, resulting in many changes in all parts of the world, some with very serious consequences and some others with moderate consequences. Developed parts of the world like U.S., EU, Japan seem to be the hardest hit, leading to high inflation in some countries, high interest rates, and lower demand for most of the products, et cetera. Obviously, steel, which is where our products are used, has also been hit hard in the last six-nine months, leading to a drop in overall production by about 8.7%. While some major steel-producing countries like Japan and Western Europe have declined between 5%-11% in the last quarter. However, our government took some proactive steps to tide over these issues, and due to our focus on infrastructure spendings, steel production continued to increase till June, July of this year and then started declining. Still a fairly small decline compared to the rest of the world. European steel industry has been especially negatively impacted by the exorbitant gas and energy prices, which are also having an adverse effect on regional steel demand. In the short term, the outlook for the steel industry still appears to be bearish. Steel demand is still being impacted by the fear of a global recession. Steel production is closely linked to the economic growth. World steel production, except China and Iran, shows a decline of 5.8% in the first nine months of January to September 2022 compared to the same period last year. There has been a quarter-on-quarter decline of steel production of 6.6% between Q2 and Q3 calendar year 2022, again excluding China and Iran. The bright spots in the otherwise bearish outlook of steel production have been U.S. and India, where demand is still strong. As per WSA's latest short range outlook, world steel demand is expected to drop by 2.3% in 2022, after it increased by 2.8% in 2021. The electrode demand, which is a derivative of steel produced through electric arc furnaces, what we in India typically call mini steel, also fell in July-September quarter due to pushback of orders mainly by European steel producers and slowdown of production in other countries. We continue to see lower demand of electrodes in the current and the next quarter, but we continue to still run the plant at full capacities currently. Having said that, I would like to emphasize that decarbonization focus all over the world is gathering steam, leading to closures of many blast furnaces and replacing them with new electric arc furnaces, which is a huge positive for companies like ours in future. U.S., which produces over 70% of its total steel through electric arc furnaces, new greenfield capacities to the tune of between 20 million-25 million tons have been announced. 6.5 million tons is set to start in next two to three months, 11.5 million tons by 2024 end, and the rest in the first half of 2025. Besides this, EU wants to replace about 16 million tons of blast furnaces by electric arc furnaces starting from 2023 end. Although China still produces only 12% of its steel through electric arc furnaces, but this has increased from 4% in the last five years, so three times. They're also on the path of increasing their electric arc furnace share to about 20% as they also try to control the pollutions. We feel that medium to long term growth of EAF is unquestionable, which keeps us confident of the growth prospects of our industry, and that's where our current expansion kicks in. About two and a half years ago, we had announced taking our capacity of existing 80,000 tons per annum to 100,000 tons by end of this year. I'm glad to say that out of six different processes that go into production of electrodes, four are already commissioned. The fifth one is getting commissioned in the next two weeks. The last one by early January. Once it is done, our capacity will go up to 100,000 tons. Our plant with 80,000 ton capacity till now has been the largest plant under one roof in the world for a very long time. In the next few months, but once it reaches 100,000, the gap between our plant and the next large plant will further increase, and we will start getting further economies of scale and cost advantages. Furthermore, our expansion is coinciding with the new demand of electrodes coming in from these new capacities of electric arc furnaces, as I just spoke. This quarter's performance was in line with the first quarter, despite lower sales volumes. The benefits of rupee depreciation, higher profits from our several hydropower generation facilities in Madhya Pradesh and Himachal, and also higher income from our hydro operations of our associate company, Bhilwara Energy, both of which did well due to early onset of monsoon this year and power prices going up substantially in the first half of the current year. The needle coke procurement for the last three quarters has been flattish without any significant increase and continues to remain so. There is no shortage of needle coke in the market due to slowing down of offtake with various graphite producers. Meanwhile, as some of you have seen our public announcements, we plan to diversify into making graphite anodes for lithium-ion cells, which form the battery for electric vehicles. Given that it is the first such plant to be up in our country, we see a good opportunity here over the long term. We are forming a wholly owned subsidiary of HEG for this new business, and our board has approved a budget of about INR 1,000 crores for manufacturing 10,000 tons of anodes in phase I, which should be ready by early 2025. We plan to invest another INR 1,000 crore for the second phase of 10,000 tons after the first phase is successfully implemented. At present, these cells or battery packs are all imported into India, and soon there will be a huge domestic demand for graphite anode powder as cell manufacturing starts shifting to India. We see tremendous growth in this business in the next decades as India starts producing and using more and more electrical vehicles. Friends, with this, I would now hand over the floor to our CFO, Gulshan Kumar Sakhuja, to take you through the financial numbers. Riju Jhunjhunwala, our Vice Chairman, and Manish Gulati, our ED. Between all of us, we'll be very happy to answer any queries relating to electrodes or our new process going forward. Thank you. Over to Gulshan Kumar Sakhuja. Yeah. Good afternoon. I will now briefly take you through the company's operating and financial performance for the quarter ended 30th September 2022. For the quarter ended 30th September 2022, HEG recorded revenue from operations of INR 598 crores as against INR 722 crores in the previous quarter and INR 518 crores in the corresponding quarter of the previous financial year. The revenue for the quarter saw a decrease of 17% as compared to the previous quarter, while we witnessed an increase of 15% on a QOQ basis. The fall in this quarter is due to lower volume offtake. During the quarter ended 30th September 2022, the company delivered EBITDA including other income of INR 198 crores as against INR 705 crore in the previous quarter and INR 169 crore in the corresponding quarter of the previous financial year. The increase in employee benefit expenses over the corresponding quarter of the previous year is on account of annual increments in service and salaries to employees and provisioning for profit related commission payable to CMD and ED of the company under contractual terms of their employment. The reason for the increase in finance cost is due to the hike in the repo rate from 4%-5.9% by the RBI to achieve the rising inflation index. Other external benchmarks like MIBOR and G-Sec have also moved in the same direction, along with our increase in the working capital requirement in the business. Apart from increasing finance cost from corresponding quarter of the previous year is on account of reduction of the interest subvention from RBI from 3% to 2%. The company recorded a net profit after tax of INR 130 crore in the second quarter of 2023, as against INR 134 crore in the previous quarter and INR 113 crore in the corresponding quarter of the previous financial year. The expansion plan is going on in full swing, and we expect the expansion project will be completed by December 2022 and ready with commercial production by March 2023. Our company is long-term debt-free and has a treasury size of nearly INR 250 crores as on 30th September 2022. Now we would like to address any questions or queries you have in your mind. Thank you. Over to Navin. Hello. Sir, should we start the floor for Q&A? Yes, please. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. 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 and limit themselves to two questions. You may join the queue again, and time permitting, we will take your follow-up questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sonali Salgaonkar from Jefferies. Please go ahead. Thank you, Ravi Sir, for the brief. You know, it was very informative. Few follow-up questions. Firstly, 70% of HEG sales are exports. Could you help us with the country-wide revenue breakups broadly, and which countries have been instrumental in the weaker demand this quarter apart from Europe? Manish, will you take that? I would say, Sonali, the revenue breakup, instead let me just do a geographic breakup data. Yes, that would be helpful. Yeah. About, let's say, 20% is Americas, about 50%-80% is Southeast Asia, about 27% is Middle East, something like that. These are the very broad figures and things are actually very well diversified as you can see. Our shares in the major steel producing regions of the world, which are South Americas and the Europe and the Southeast Asian regions. These are the core areas and all these different countries we have a presence. Traditionally, if you take it as a 20% share, ± 2%-3% each in every area. Europe will be low this year. Otherwise, it was about 10% is going to Europe, European nations. I'm talking about total. Again, one-third of our production is in India. If you add all this up, you get 100. Right. Sorry, sir, I missed the number you gave for Europe. 10%. We used to be there. Now it's probably going to slip to 7%-8% of the total volumes. Understand. Sir, what was our capacity utilization in Q2 and currently? Because you did mention that your plants are operating at a healthy operating utilization. Also, what is the inventory position in this system for the electrodes? We continue to run at a 90+ level, and that's what we have been doing for last six quarters. We have not slowed down yet. As I mentioned, we have no intention to slow down at least for this quarter. Our sales till April to June quarter was, I mean, we sold as much as we made, again in the 90s, some early 90s. That's what our sales realization was. July to September, it's in early 70. October to December as we see maybe it will be in 60, mid-60s or something. We continue to produce at full capacity, but only from July to September quarter we have sold less compared to our production. October to December quarter also seems to be in the same way. The inventory position? Inventory position is still fine. It's not unmanageable per se. Let's say we can say a month and a half worth of inventory, which is quite normal. I think a month is considered very normal. Our operations where we create so many sizes, so many grades. To be on the other end, we have a month worth of inventory that we consider right, and we have a month and a half. Understand. Sir, about the pricing of electrodes, what has been the trend in pricing which we saw in Q2? Because, you know, in the first half we did see some pricing freezes panning out in electrodes like in last year. What's the pricing trend in Q2? What do you expect to be the pricing trend in H2? Q2 pricing is virtually almost the same, I would say. Very insignificant increase between Q2 and Q1. You can consider it was just exactly the same. In 2023, in which we are in, our average price might be about 3%-4% down. January to March, still we are not looking at it. If things continue to go like that, maybe that quarter also remains under pressure. If things turn around, it can revert to the current price level we saw in July to September quarter. That remains to be seen because we are also booking very gradually. We still are booking for January to March quarter. Understand. Sir, for our new products, that is, lithium-ion product that we are entering, could you help us with the overall TAM, that's the total addressable market which you foresee would be panning out in India? Correct me if I'm wrong, but your revenues will start accruing from FY 2026 onwards. Is this correct? Yeah. I... Sonali, I'll have this question better answered by Mr. Riju Jhunjhunwala, as he's leading this project, so it's better that he answers it for you. Sure. Riju, it would also help if you could give us the year-wise breakup of CapEx, at least for the phase I of INR 10 billion which is set out for the next three years. Thank you. I mean, you asked about the overall market size. Let's say by 2025, according to all conservative estimates, the overall battery demand or cell demand for India would be 50 GWh. This is what all the companies have signed up in their DLI schemes, et cetera, also. Which would mean on a very pessimistic side, an annual graphite anode demand of 50,000 tons just for the domestic market. I mean, and if you wanna understand more in detail, this means around 10 lakh E.V. cars or let's say 1 lakh buses. I mean, and our total size that we are putting up in phase I is 10,000 tons. You're talking about a market size very conservatively of 50,000 tons in phase I. Our total investment is around INR 1,000 crore, which includes working capital, et cetera. This would be in stages between, let's say, March of 2023 to March of 2025. Spread over two years. We hope to start commercial production by, I mean, latest by first April 2025. Understand, Riju. Very helpful. Could you help us understand the needle coke pricing trend right now? I mean, if you are expecting the electrode pricing to be slightly under pressure, is it safe to assume that even needle coke could stabilize going forward? That's a fair place. I mean, there has not been any change in the price of needle coke. As I said, availability is not an issue. Before you ask that question, let me clarify. In our case, the conversion cost being fairly low, our fixed costs are probably the lowest amongst all the graphite producers. The total cost of converting needle coke to finished electrode is not very significant. As we see, especially America is still going very strong on steel. As Manish just responded to your question, America also happens to be our second-largest location for exports after India. It doesn't take too much to keep the inventory of finished stock rather than keeping the inventory of needle coke safe. We have taken a very conscious decision that this is a small, short blip in the market. We see this market turning around maybe in one quarter, maybe in two quarters. It doesn't tie up a lot of your money if you keep needle coke or you convert the needle coke into electrodes. For any short-term blip, we don't want to take the risk of losing the market and losing the market share. That's the only reason we keep producing at 90%, even if you are not selling all that product. Understand. Just one last question from my side, probably a clarification on a number which you gave in your opening remarks. For the decarbonization trend, you mentioned 20 million-25 million tons of EAF capacity, greenfield capacity. It's likely in the U.S. Am I correct? By which year are we expecting? See, we gave some breakup. Okay. About 6.5 is already starting in the next three to four months. We have the names, we have the locations, we have the capacities of each one of these. About 25 million tons overall that I'm speaking about. 6.5 to 7 million tons is starting in the next three to four months. By middle of 2023 or let's say by end of 2023, next is another 10 to 12 million tons. The rest from early 2025 onwards. It doesn't take too long to put up a electric arc furnace. Very much less compared to a blast furnace. Got it, sir. This has been very helpful. All the best. Mind you, this 20-25 is only America. It's only America because America produces more than 70% of its steel through electric arc furnace. Got it, sir. Very helpful. All the best. Thank you. Thank you very much for answering my questions. Thank you. Next question is from the line of Nikhil Saboo from SKP Securities. Please go ahead. Yeah. Hi, sir. Sir, recently GrafTech has closed down their Mexico plant which was having an annual production capacity of 60,000 or representing 60% of their total graphite production. Plus, this is the only site which is also producing pitch, which is being utilized by all the GrafTech's battery electric division. In the recent con call, they have highlighted that they are trying to mitigate this nipple production by shifting it to either at St. Louis facility or at one of the European facilities, but which will take some time. Plus, they have given the guidance of a lower Q4. If the Mexico plant remain closed, then they are saying that their 50% of their sales volume will be impacted in H1 calendar year 2023. In such a scenario, if the Mexico plant remain closed for at least next six months, how you foresee the graphite electrode supply shaping up? You see, it is one of the three largest plants in the world. I mean, ours, if you call it the largest with 80,000 tons going to 100. There is another plant in U.S. of Showa Denko which is 70,000 tons. This plant of GrafTech in Mexico is the third one with 60,000 tons. As you rightly said, the nipples, which is a very critical product with electrode. One electrode goes with one nipple. It is basically just a 4% weight of the total electrode. Without that nipple, you cannot join the next electrode. Electrode being consumable every couple of hours, every six hours, eight hours, as you consume one electrode, you keep adding one more piece of electrode. That is where you need this pins or nipples as you call. Typically, all these large companies who have more than one location for producing electrode, they have this tendency of concentrating their nipple production all at one place. They air freight the nipples to their other locations to sell electrodes and nipples together. Unfortunately, in this case, Mexico is the location where 100% of nipples of GrafTech's entire 180,000 ton capacity were produced in Mexico. That is the plant where there have been problems for about two months now. Now, whatever we know, we only know from the public source and a lot of papers that they have disclosed in the public domain. Basically, we don't have any more information than what you have. The fact is that this plant has been closed for two months, and they have themselves said that they don't see an early resolution. They are themselves saying that in the current quarter, which is the October-December quarter, their sales will go down by about 25%-30%. Going forward, as their nipple inventory keeps coming down and down, because they're not producing any more nipples, without the nipples, electrodes cannot be stored. It cannot be used. Going forward, if this problem continues for, let's say, the next even six months, it is a problem. It is a problem for the whole industry. This whatever tonnage is available with GrafTech will get canceled. They clearly said that in their recent reporting to the SEC. Okay. Can we expect an inventory volume coming up in first half of next financial year? Since we are already producing at around 90% capacity levels, while our sales volume would be somewhere close to 65%-70%, can we expect to liquidate our excess inventory if there's any inventory gain coming because of this? No, we will be of course. I mean, if a large part of GrafTech's sales comes down because of nipples, then obviously everybody else, I mean, we are not the only ones. I mean, whoever else is in the production of electrodes, that's the only option. We have already started seeing some movement there. I mean, as Manish said, America happens to be one of our largest export markets, and the Mexican plant was majorly supplying to U.S. GrafTech doesn't have a operating facility for electrodes in U.S. Most of their U.S. sales were coming from Mexico, which is very close to them, which is close over, which is next door to U.S. We've already started seeing that kind of a movement. I mean, the inquiries and the pace of negotiation, the new orders which are trickling in now, we are getting a feel that more and more demand is getting, let's say, distributed to the remaining two-three producers of electrodes. Okay. Got it, sir. Thank you. Thank you. The next question is from the line of Bhavin Chheda, Enam Holdings. Please go ahead. Yes, a few questions. First on the graphite anode new project what you're planning. Can you give some economics on what kind of product just NSR is? What's the raw material used? What kind of EBITDA margins this product will generate? What are the critical raw materials to be for and what would be the payback you are targeting for INR 1,000 gross CapEx you are planning for first 10,000 tons? Yeah, sure, Riju. Yeah. On the CapEx, you're talking about INR 1,000 crore CapEx. We're expecting a turnover to CapEx ratio of approximately 1/1. The raw material, and that's why we have ventured into this particular segment, is that the raw material that we use for our graphite electrodes. Let's say the needle coke and the Indian coke that we use, it will be more or less the same for this particular venture as well. The raw material price would really kind of depend on the prices of that day. The selling price, of course, this is a highly value-added product which is not sold in tons. It is sold in KGs, etc. You're looking at a much higher per unit realization of more than double of what you are currently seeing in our graphite electrode business. Basically, the processes are quite similar, and that is why in terms of the technology, etc., we feel confident that we'll be able to do a good job of it. Again, the payback period, etc., what you're looking at, if everything works out the way we are seeing it, should be between five to six years. Just one question here. Since you said that the NSR is almost double and more or less the process raw material is the same, so can we assume that this business will have much higher EBITDA margins than your current electrodes business? Yeah. I mean, an electrode business, as you know well, it fluctuates between year and years. If you take the current margins that we have in our electrode business, the margins in the anode business should be significantly higher than that. Sure. Other questions on the existing electrodes business. You mentioned there's some six and a half million starting in the U.S. in next four or five months. If you have the list, can you name two, three players who are expanding this six and a half million electric arc furnace in U.S.? I think you said by middle of 2023, another two and a half million. Can we get some large CapEx which is happening in U.S., so easy to track for us? I can send it to you separately, but you will find most of the known large steel companies in U.S., led by Nucor. I'm sure you've heard of Nucor. Yeah. Nucor, U.S. Steel, and those are the most of the guys who are. No, U.S. Steel is. Are they listed? No, U.S. Steel is primarily blast furnace. Nucor is 100% electric arc furnace. The second large producer of electric arc furnace steel in the U.S. is a company called Gerdau, originally a Brazilian company which was acquired by Americans. There is a company called Steel Dynamics. There are several others. There are at least eight-10 large EAF steel producers in U.S. who are adding these capacities. We can send you the details separately. Sure. They are adding this capacity. This is public information, and it will really interest you. I can just take the names quickly. One is Steel Dynamics at Corpus. The second one is North Star BlueScope. Third one is Nucor at Gallatin. Fourth one is again a Nucor plant in Brandenburg. There's a group called CMC. It's in Arizona. They've got two plants. One is ArcelorMittal. They're coming with electric arc furnace. There's Algoma in Canada and U.S. Steel. All this is public information, and you can always ask us offline. We'll provide it. No problem at all. Yeah. These are the new capacities adding, and they are not replacing the existing either electric arc furnace. No, these are the new electric arc furnaces. There are anyway very few blast furnaces in North America. As Ravi Jhunjhunwala said, they already have 70% electric arc furnace share they have. The gains which we are taking are for the newly announced U.S. capacities. These are additional capacities. These are additional. Sure. Yes. The existing CapEx, I think ongoing CapEx from 80,000 to 1 lakh, if I remember, this was an INR 1,200 crore CapEx. Yes. If I see your CWIP, looks like INR 853. I think another INR 400 crores is the spending number on this expansion, which should be done by March. 200 by March. Actually, there were another two shops which you are not taking in there. Actually, put together, we have spent INR 1,000 crores. There were some two shops which were in before the expansion, where they'll also be, of course, a part of that. The spending is INR 200 only now. INR 200 crores, yeah. There are no other projects. 200 and your running capacity would be 1 lac probably by mid-March. Yeah, yeah. Okay. Thank you, sir. Yeah. Okay. Thank you. Thank you. The next question is from the line of Amol Rao from Kitara Capital. Please go ahead. Good afternoon. I remember that we were talking about tying up our power requirement, especially now that we are going to be getting another 20,000 tons. We're talking to, I think, the Madhya Pradesh State Electricity Board for good power purchase agreement long-term. Is there some change in that plan? Has that been done? Anything, any comment on that? We're not getting any power from Himachal. We have our associate company which produces about 300 MW of hydro in Himachal Pradesh, but that is all sold in the power exchange on a daily basis. We don't get any power from Himachal. It's not practical in India to get power from Himachal to Madhya Pradesh. The transmission charges and everything is so high that it doesn't make sense. We are buying 100% from the Madhya Pradesh Electricity Board, and more so 100% because in the last 12 months, 18 months, given the cost of coal and the issues related with carbon emissions of coal and all that. We have about 65 MW of captive coal generation at the same location as graphite. Which is not operating for the last two and a half years now because we are able to get everything that we need from the Electricity Board, which is much cheaper than producing your own power today. Got it. Will this arrangement also continue for the additional 20,000 ton? Yeah. We have that agreement. All right. This is going to be again at the Mandideep facility. Correct. -expansion? You're talking of the graphite expansion? Yes, sir. The anode. No, no. Anode is not coming in Mandideep. We are still to decide the location. We are weighing two or three options within Madhya Pradesh. All right. Within Madhya Pradesh then. It will be Madhya Pradesh. It has nothing to do with the existing graphite plant. Got it, sir. Thank you so much, sir. Thank you. The next question is from the line of Yash Dantewadia from Dante Equity. Please go ahead. Hello. Hi. Yash, your audio is not clear from your line. Please use the handset mode. Hello. Am I audible now? Yeah. We can hear you. Yeah. Your existing capacity is 80,000, and you've added 20,000 more. By when you see this 20,000 capacity getting utilized by let's say 90%-95%, how much time do you think it'll take you to reach there? You see, as I explained earlier, I mean, there are six different processes into the production of electrodes. There are six shops or six processes which are being newly built for this 20,000 tons, out of which four have already started. The fifth one is starting in the next two, three weeks, and the last one will start in early January. The total cycle for producing electrodes is between two to three months, two to four months, let's say. In the real sense, the entire 20,000 tons will be available, let's say, flexible base. We'll start the sixth process, the last process in January. It'll take us between three to four months for us to produce finished product out of this because the process itself is anywhere between three to four months. What's your existing capacity utilization for your 80,000 capacity? As Manish said, I mean. We are running at 90. As Ravi Jhunjhunwala said in the beginning, we're running at 92%, 93%, 94% level for all these quarters and continue to do so. They from this quarter onwards is the best. This 20,000 that's coming up, it will take another six months, you know, to get on full fledge. How long do you think it will take to reach 90% capacity utilization? See, it depends upon global conditions because as soon as the steel production in the world gets back on track, and we'll be soon seeing this capacity absorbed. Let's say finally what we talk about, let's say between one-two years we should be able to. Let's say within by 2023 end or 2024, we should be at that 90% level because the new demand of electrodes will come in in the world with new electric arc furnaces. We expect to get back at the 90% level within one-two years. That is 2023 and 2024. Thank you so much for taking my questions. Have a great day. Thank you. Thank you. Reminder to the participants, anyone who wishes to ask a question may press star and one. Participants, to ask a question you may press star and one at this time. Reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Pratim Roy from B&K Securities. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Currently you have just mentioned that you are working with 90% capacity utilization. What is the volume number? Means how much you have sold in the market and what is the expectation you guide on that? We've made mention that the 21,000 MT is almost in line with the same time. Just can you tell particular the number, how much is the expectation? See, I've heard you clearly. I didn't hear you clearly, but I think what you're asking, how much we've sold in this quarter of Q2. This is in early 70%. For the October to December, supposedly we are in the 60s because we are already in the middle of November, so we can see where we are going. For the next quarter, they now have started booking for January to March quarter, so that remains to be seen what level we can expect. Okay, sir. What is the current realization for the right now? I cannot give a specific figure on a price, but it's very easy for you to calculate because all we do here is electrodes. Got it, sir. Got it. Yeah, yeah. Got it. Yeah. Thank you. Thank you. Thank you. Participants, to ask a question, you may press star then one. Reminder to the participants, anyone who wishes to ask a question, may press star then one. Participants, to ask a question, you may press star then one at this time. The next question is from the line of Sanjay Jain. Individual Investor, please go ahead. Hi, sir. Thanks for taking my question. Wanted to get a little bit more insights on this graphite anode that you have announced about coming through. Where are we getting this technology from? Could you just talk a little bit more on the process? Like, what are the expenses on what kind of conversion costs will be and what dynamics could be driving those conversion costs? Technology-wise today, let's say 90%-95% of the entire anode production in the world is in China. Process-wise, this comprises of I mean, four-five different processes like crushing, grinding, coating the raw material with carbon, with pitch. The main process in this is the graphitizing of the raw material, in which basically where we see as HEG, we have a 50-year experience in the main process, which is the graphitizing of the raw material. Technology-wise, we are pretty confident because, you know, a lot of technology is inbuilt in what we have within HEG. Some bit of technology we will be outsourcing from some European companies and Chinese companies. Process itself, like I said, it's like you have five-six different processes in electrodes. You have five or six different processes in this. The raw material for both the products is the same. Yeah. I was asking about what kind of process is there in this making of graphite anode. You also think you were explaining thermal process including graphitization. We lost the line. Yeah. That's what I was explaining, that was four or five processes. One of the major processes is the graphitization in which the process is quite similar to what we have in the electrode space, which is where our expertise comes in. Here the final product is basically crushed graphite powder, which is very small in size and made according to the customer's requirements in different shapes or in different kind of qualities. Really, in terms of the technology and processes, we are very confident that we'll be able to do a good job in this particular product. Seeing the kind of demand that's going to be there in the next 10 years, the potential to, you know, keep adding capacity in second or third phases is tremendous. Okay. Another thing that I wanted to understand is what kind of yields are there with this? Like, if you take what is the raw material like coke, needle coke you mentioned, and you also talked about pitch. For making 1 kg of finished product, how much quantities of raw material is needed? I mean, you can talk about it. It's something very similar to graphite electrode, which will be around 1.2 kg, 1.3 kg for the finished raw material. 1.2 kg-1.3 kg of, let's say, raw material to the finished product. The raw material would be a mix of, depending on quality, a mix of Indian coke and imported coke that you have, needle coke. The needle coke would be very limited in its application. Mostly our entire requirement should be met out of the Indian coke itself. So you're saying that, uh, there's less requirement of needle coke, more, uh, requirement of Indian coke. Correct. Correct. Okay. Overall raw material cost could be actually lower per ton of finished product. Well, raw material, obviously, the raw material cost as a percentage of selling price will be significantly lower. Even on a per kg basis, it should be overall lower because the raw material requirement is not what we have for our UHP electrodes. It's more or less what we have for the other electrodes that we have. Now, since the raw material is cheap on percentage, then why is the price of the finished product 2x as compared to graphite electrode? Is there too much of processing cost involved in this, or is it because of the lower throughput per amount of capacity that we are expecting? It's a mix of all. It's a mix of demand, supply, it's a mix of technology, and obviously it's a mix of the lower throughput. If you're talking about a 1/1 capital to turnover ratio, obviously we will need to have a very high EBITDA over here in order to be, I mean, financially very viable. Even today, what we have seen in the last six-seven years, the selling prices are stable for this particular product and the processing cost is very similar to what we have for the graphite electrodes. Going forward also, this is not expected to come down drastically because of the simple fact that the requirement for the anode powder is gonna go up very, very substantially, not just in India, but across the world. That demand-supply mismatch will always be there. You have this two-year lag time of putting up any new capacity. Got it. Basically you're saying that probably cost per ton of finished product will be lower, conversion cost will be similar. Right. I missed, I think you mentioned in the earlier discussion that what will be the tonnage out of this 1,000 ton capacity? We are talking about a 10,000 tons per year plant, which would give us approximately a 1/1 capital investment to turnover ratio also. Got it. In the first phase we are going for 10,000 tons. In the second phase we'll add another line of 10,000 tons. Got it. Thank you so much for answering. Yeah. Thank you. Thank you very much. If there are no further questions, I'd like to hand over the conference to Mr. Riju Jhunjhunwala for the closing remarks. Over to you, Riju. Hello. I think, Manish, I think the closing remarks would be directed towards you, I guess. Okay. Okay. Let me say, friends, thank you very much for attending our call, and we remain very optimistic for our business electrodes, especially with this stabilizing anode coming up. We see a bright future for HEG, not only in our bread and butter business of graphite electrodes, but also for this new product called anodes, where we are positioning ourselves as a green energy company. We look forward to speaking to you after the next quarter results are out. Thank you so much. Thank you, Manish. Thank you, Riju. Thank you. Ladies and gentlemen, on behalf of SKP Securities Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.