Good day, ladies and gentlemen. Welcome to HEG Limited's Q2 FY2026 Result Conference Call organized by SKP Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and you will be able to ask questions after the management's opening remarks. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agarwal, Head, Institutional Equities at SKP Securities Limited. Thank you, and over to you, sir. Good afternoon, ladies and gentlemen. I'm pleased to welcome you on behalf of HEG Limited and SKP Securities to this Financial Results Conference Call with the leadership team at HEG Limited. We have with us Mr. Manish Gulati, Executive Director, along with his colleagues, Mr. Om Prakash Ajmera, Group CFO, Mr. Ravi Tripathi, CFO, Mr. Puneeth Anand, CSO, and Mr. Ankur Khaitan, MD and CEO of TACC Limited, a wholly-owned subsidiary of HEG Limited. We'll have the opening remarks from Mr. Gulati, followed by a Q&A session. Thank you, and over to you, Manishi. Good afternoon, and welcome to HEG's Financial Results Conference Call for Q2 FY 2026. Let me begin with a brief overview of global steel industry trends, which continue to shape the demand environment for graphite electrodes. As per the recent World Steel Association global crude steel production, in the first nine months of 2025, stood at 1,373 million metric tons, a 1.5% decline year-on-year, indicating a slowdown in demand across major economies. China's crude steel output declined by 2.6% year-on-year due to weak construction and production curbs. China's crude steel production saw a sharp sequential decline of 9.9% in the last quarter, reflecting extreme caution in domestic demand. China's finished steel exports in Q2 surged 9.2% year-on-year to 58 million metric tons, intensifying global competition and pressuring international steel prices. Now, World ex-China crude steel production was soft, declining marginally by 0.1% year-on-year to 627.6 million metric tons and 1.5% sequentially in Q2, driven by ongoing macroeconomic headwinds. India remained a stand-out performer, posting a 10.5% year-on-year increase to 122.4 million metric tons, supported by continued infrastructure and automotive sector growth. Among other major producers, Japan declined 4.5%, South Korea fell by 3.4%, and the U.S. registered a modest 2.1% increase. The graphite electrode market continues to face challenging conditions. Customer demand remained muted due to cautious procurement and aggressive export pricing by Chinese suppliers, which intensified margin pressure for producers globally. The recent imposition of 50% reciprocal duty in the U.S. poses a potential headwind to our competitiveness in that region. However, we hope that tariffs will settle down to a more reasonable level in coming times. In any case, HEG has a well-diversified sales footprint across all major global markets. On a positive note, we are proud to announce higher revenues due to higher sales volumes and decent profits for the quarter, demonstrating our operational resilience. We continue to operate at one of the highest utilization levels in the industry, 90% plus in the last two quarters, compared with our peers. The electrode prices have remained flattish between Q2 and Q1, and so have the needle coke prices. We hope that in two to three quarters, steel production starts to increase and the new electric arc furnace capacities start coming on stream in the next one to two years. Our single location, 100,000-ton production base, combined with the structurally low-cost environment in India, positions us as one of the most cost-efficient graphite electrode manufacturers globally. The global transition towards low-emission electric arc furnace steelmaking continues to accelerate, driven by climate goals and regulatory momentum. This transition is expected to generate substantial incremental demand, as we have said in the past calls, estimated at approximately 200,000 tons of graphite electrodes by 2030, excluding China, reinforcing the industry's long-term potential. As you are aware, we have already announced further expansion of 15,000 tons with a CapEx of INR 650 crores to be completed by the end of 2027 and be ready for production in the first quarter of calendar year 2028. Despite ongoing market challenges, we remain confident in the medium to long-term growth trajectory for our industry. The combination of electric arc furnace-led structural demand growth and supply rationalization should gradually lead to market stabilization and margin recovery. Regarding the demerger process, the ongoing composite scheme of arrangement has been filed with the stock exchanges and remains under review. While the process has taken longer than anticipated, we are confident of receiving stock exchange approvals in due course. Upon receipt, the scheme will be filed with NCLT for its consideration. Based on the current timetable, we expect NCLT approval by April 2026. With that, I would now like to invite our CFO, Mr. Ravi Tripathi, to present the financial results for the quarter. Thank you. Over to you, Ravi. Thank you, sir. Good afternoon, friends. I will now briefly take you through the company's operating and financial performance for the quarter-ended 30 September 2025. For the quarter-ended 30 September 2025, HEG recorded revenue from operation of INR 697 crores as against INR 568 crores in the corresponding quarter of the previous financial year. During the quarter-ended 30 September 2025, the company delivered EBITDA of INR 226 crores as against INR 140 crores in the corresponding quarter of the previous year. The company, on a stand-alone basis, recorded a net profit after tax of INR 131 crores in Q2 FY 2026 as against the amount of INR 62 crores in the corresponding quarter of the previous year. On a consolidated basis, the net profit after tax is INR 105 crores in Q2 FY 2026 as against INR 82 crores in the corresponding quarter of the previous financial year. The company is long-term debt-free and had a treasury size of nearly about INR 1,167 crores on 30th September 2025. Now, to take more questions from the participants, a detailed presentation has been uploaded on the company's website and on the stock exchange. Now, we would like to address any questions or queries you have in your mind. Thank you. Over to Navin. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touchstone 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 questions 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. To ask questions, please press star and one. The first question is from Amit Lahoti from Emkay Global. Please go ahead. Thanks for the opportunity and congratulations on a good set of numbers. My first question is on Q2 performance. How much revenue increase could be attributed to volumes and product mix, and how much to prices? Okay. See, prices, as I said in the remarks, were flat between Q2 and Q1. The rest is the top line which you are seeing is coming from higher sales in Q2 compared to Q1. Okay. So completely it is coming from volume. Completely on volume. Ravi, you want to add a point on this revenue? Yes. It's completely due to volume increase only. Prices are flattish. Okay. Thank you. Second question is on CBAM implementation. What are you hearing from our customers in terms of demand, EAF transition, cost pass-through mechanisms, etc.? I mean, is the industry which is on the EAF side of steel more excited or worried from these regulatory changes? See, this CBAM on steel particularly will probably kick in sometime in 2026. Obviously, when there will be some great barriers, then I think there's talk about cut-off steel import quotas also in the EU. I'm just talking about the EU. That might be helpful to the steel industry in the EU, which is still quite blast from its base, I think, for EAF is less than 45%, about 45%. It will be helpful to the steel industry in the EU for both of these reasons. Once CBAM takes effect and also the talk about cutting steel import quotas, certainly there should be some upswing in steel production in the EU. Okay. And then on tariff, are our customers asking us to absorb some impact of reciprocal tariffs? If you could quantify the net tariff impact that is applicable to us. See, we are now just about completing 2025. Our business in the U.S. is done by the calendar year. We are hoping that by the time maybe another month or so, in fact, there was a news floating yesterday also, which I do not know, we have to receive more confirmation about that. In times to come, we are very hopeful that duties might settle down to more reasonable levels, as has happened with other countries. U.S., yes, it is an important market for us. Any customer in the U.S. would want a similar price compared to the local suppliers. Tariff, whatever it is, of course, the customer is not going to pay that over and above the price. They will not increase their procurement cost. We will take a call once we figure out finally what kind of tariff finally gets applied. Right now, it's a little early to say because we are also watching, and 2026 is still two to three months away. We'll see what happens. My message to you is the answer to your question really is that we are hoping that these tariffs settle down. We would, of course, like to remain in the U.S. market, and we'll try. Yes, customers, it's very clear. Why should they pay 50% higher price for graphite electrodes? Obviously, whatever it is, 10, 15, 20, whatever finally it settles down to, that's our hope. What happens, we can't guarantee. Obviously, that will have to be taken care of by us. The customer will need a delivered price. Let's say tariffs come down to 25%. Is it going to be economical for us to absorb that entirely? It's hard to say. We will see because, of course, when tariffs are put, of course, we feel that internally prices should also start firming up within the U.S. So we will see as it comes what kind of tariffs finally apply, what is the local price, what happens to the local price in the market, in the U.S. market, and then we'll take a call. Okay. See, I just want to add here. See, HEG, our U.S. portion of sales is only 10-12%, and we are supplying to 35 countries. Of course, I mean, we are very well diversified. We might have to do some this. We might have to see other markets also. It is not as big a risk for us. It is not like that we are supplying 50% of our production to the U.S. Then, of course, it was a big risk. Okay. Got it. The housekeeping question. At the time of demerger, how much of net debt, which is there in the consolidated books right now, would be allocated to graphite entity, and how much would be to green tech entity? Ravi Tripathi, you go ahead and answer. Yeah. We have a total treasury size is approximately INR 1,200 crores. Out of this, INR 830 crores we have allocated to the TSEC and remaining with the graphite business. Okay. That's very helpful. Thank you so much. Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Rohan Baranwal from Arihant Capital. Please go ahead. Thank you very much for the opportunity. Sir, my question is related to the capacity which you have added. You currently have an installed capacity of 115,000, and you mentioned that you have a utilization up to 90%. What kind of growth in volume terms and in margin terms are you looking at going forward? Yeah. Rohan, first of all, just wanted to correct you. It is 100,000 now and 15,000 capacity expansion we have announced, which will get completed by 2027 end. If you now are coming to volume growth you are talking about, see, last fiscal 2024-2025, we were at roughly 80% capacity utilization. Now, in the first half, we are 90% plus. We are hoping that by the time we close the year, we are maybe between 85% and 90%. Maybe we are hoping for 90% capacity utilization. That is the kind of volume growth which we have seen between 2024-2025 and 2025-2026, which we expect. The expansion will take two and a half years to come. Once it comes, we feel that the new electric arc furnaces, which are coming on stream, will be at least 20 million metric tons, which will get added. Even more importantly than that, once the steel production, which has been languishing for the last two, three quarters, I'm sure you have been tracking that, that when it takes upturn, it should bring additional demand for graphite electrodes from existing capacity as well as the new capacity. Got it, sir. That's very good. The next question is, what kind of product mix which you have between UHP and NSP electrodes? And how do you see it evolving over the next two years? See, our focus has always been and continues to be in the ultra-high-power segment only, in UHP electrodes only. Proportion-wise, if you ask, it's probably a 70-30 or something kind of proportion between UHP and non-UHP because some of our regular and long-term customers whom we supply electric UHP electrodes also expect that we will supply the HP-grade electrodes to them. It is not a significant portion, really. As I said, in excess of 70% or maybe 75% is UHP only. In the coming expansion also, whatever capacity we'll be building will be focused only on UHP electrodes. Okay. Yes, I've got it. Sir, what impact do you expect from the recent global capacity closures on the pricing and the order visibility? See, the two plants which one of our big competitors announced closure, one in Malaysia and one in China, China anyway did not have an impact globally. The other plant probably was not anyway not running full. You see the kind of utilization the whole industry as an average has, these capacities going out have not really created a big impact just because the demand environment itself is slow. Yes, when the demand goes up and the industry level, all industry, I am not talking about HEG, gradually all the average utilization levels will increase, then of course prices should start to come up. Thank you very much for the time, sir. One last question from my side. After that, I'll join in the queue. Can you share your plans for the expanding capacity or new opportunity you are looking into? See, the new opportunities, Puneeth ji, I will take this question because there are several new products which the company is going to do. Puneeth ji, please. Yeah. Thank you so much, Manish ji. Upon the demerger, on the HEG Greentech front, there will be four businesses which will be there. One is the anode material manufacturing, which is currently going on. Second is the existing hydro plant. Bhilwara Energy Limited holds 51% equity of these hydro assets and has signed a definite agreement to acquire the remaining 49% from Statkraft. Following the closing, HEG Greentech will own 100% of Malana and Allain Duhangan, which represent around 278 MW of hydro assets. Third business is our BESS EPC business. The EPC business has an installed capacity today of 1 GWh with a plan to expand to 6 GWh by quarter one FY2027. It serves for both stationary energy storage and mobility application. We have been strengthening our order book and in-house BMS and EMS systems. This will support in discipline scale-up, which we are doing in our BESS EPC. The fourth vertical which we are working on is the IPP, which is BESS plus Flora. The IPP vertical is focused on C&I and B2G segment with participation in the state and central tenders. The first 200 MWh project is expected to be operational by quarter two FY 2027, which is the Juvenil one, and with an additional tender of 1,000 megawatt hour, which is targeted to be commissioned by quarter two FY 2028. We are expanding this business and expect that this IPP business will contribute considerably in the HEG Greentech EBITDA margins. These are the two businesses which we are doing in the HEG Greentech post the demerger. All are in existence, yeah. Got it. Will you be adding the manufacturing facility for the BESS side? On the BESS side, we already have an installed capacity of 1 GWh. That is more on the assembly. We buy cells and we assemble it in our own plant, which is in Pune. We are doing an expansion from 1 GWh to 6 GWh. Okay. So the containers and the battery energies are all sourced from or imported and then assembly is done. Am I right, sir? Yeah. Yeah. Our focus now is to make in India. We will do maximum things out of India only and through our plant in coming quarters. Got it, sir. Thank you very much for that answer of my question. I will join in the queue. Thank you. Thank you. The next question is from Chirag Pachisia from SKP Securities. Please go ahead. Good afternoon, everyone. My question is on the green tech side, you had carried about INR 500 crore-INR 600 crore in revenue and INR 200 crore-INR 225 crore in EBITDA for FY 2026. Could you share what the actual contribution was in H1 and how you see visibility shaping up by end of April, especially post the demerger? The H1 EBITDA is primarily to the hydro assets only, which is already there. The revenue which is coming in at the HEG Greentech level for other businesses, so that will be coming from quarter four of FY 2027 for anode when the plant is getting commissioned. The RE+ business is there, but right now, since we are doing on an expansion basis, the margins and the EBITDA is low there, but that will pick up. BESS and IPP, the margins and revenue will start from quarter two of FY2027. Got it. I think it will be premature for an FY 2027 number as of now, so. FY 2027, we have some anticipation and some predictions, but it's too early to say because these projects are under execution. Once these get executed, we can see. Primarily, you are in line with the FY 2026 numbers which you have mentioned. We have hope that the EBITDA will be doubled in FY 2027 on this. The numbers which we have just said on FY 2026, the numbers will be doubled at least by FY 2027. Got it. Makes sense. I'll just tell you the full contribution on the EBITDA will be coming post quarter 27 when my anode has been live and my RE+ business has been live. Plus my IPP projects, which is roughly 650 MW as on today, which the tenders we have won are on live. Got it. Thank you. Thank you. Participants who wish to ask questions, please press star and one. Next question is from Rajesh Majumdar from B&K Securities. Please go ahead. Yeah. Good afternoon, sir. So I had a few questions. First of all, we've seen the Indian players operating at a very high utilization rate last quarter, and GrafTech is also operating at 65%. What is your guess of the global industry utilization capacity utilization rate currently, excluding China? Rajesh ji, you've seen our utilization, you've seen our Indian peer contribution, and you also know GrafTech. That only deals with two main suppliers, either one, which is Resonac, and then followed by Tokai. I believe they should be around GrafTech levels. Should be. I can't hazard a guess because their figures are not public, but it's just a guess that they should be around them because they are located also in similar countries and catering to similar demand. My guess is they should be around that only. Which means the overall industry utilization rate could be about 70%-75% if you think about it. About 70%, maybe. I think so. If you combine, maybe around 65% or 70%, something like that. In your experience, what is the industry utilization rate where the prices can actually take an upturn? Is it 75%? Is it 80%? Or where do you think that inflection point can happen from the current 70%-odd level? Yeah. Amazing. Amazing question. Yes, yes. I have that past experience. Maybe it should be when it crosses average utilization, crosses 85%. 85%. Once it starts close to between 80%-85%, then prices start to form up. That's as per the past experience. Okay. 80%-85% is a good kind of guess. Yeah. It's Yeah. It's a good number when prices start to firm up. Secondly, sir, we were hearing some murmurs of some price forming in the HP electrode side this quarter. Is that true, or do you see any kind of uptick in the HP electrode prices happening? You mean in the October to December quarter where we are? Yes. Yes. October-December quarter. Correct. Yeah. Yeah. That was very marginal. That was only in HP because HP prices were already low. This is a globally, if we see, this market is quite dominated by Chinese players. The pricing, I mean, I'm just talking about, I would say, Indian context, there's a very slight price increase. Globally also, I'm not sure really whether we can really pull up an average of basket of wherever we supply and actually demonstrate price increase. It will, I would still say, be the same level. The increase in domestic was very marginal. It was nothing. It was just to cover our costs. Is it only in the domestic market, is it, the price increase? No. You see, in some markets, we have a little bit here and there. But as I said, if I actually pick up that average of all the sale, I probably will not be able to demonstrate an increase. Somewhere, we're getting a better price or not a better price. Actually, as I said, it's so much dominated by China. That depends on our sales mix, where we sold, how much we sold, which customers. If I pull up an average of Q2 versus Q3 later, still one and a half months to go, I do not think I will be able to demonstrate even a 5% or a 10% increase. I do not think so. Globally, average. Global average. Yeah. Yeah. Great. Sir, what is the cost of needle coke for 2Q, and what is the inventory now of needle coke that you have? See, price, I won't be able to divulge honestly, but it's not difficult for you to find out. They have been pretty static for two to three quarters. Just like electrode prices have been at a similar level for three quarters, the needle coke prices have also been that way. The inventory at plant are comfortable. It's our standard. I can't disclose the real number of inventory, but it's enough. If I see it as an average, we are not low on inventory. I would say rather we are a plus on inventory. On needle coke inventories at plant and transit, we are rather slightly on the higher side, not lower side. Right. If I could have another last question, suddenly we see a kind of capacity increase announced by the Indian players after so many years. I was under the impression that needle coke availability is a big issue in the industry. Where are we getting all this needle coke from to announce the capacity? If you combine that with your competitor, the total increase is nearly 40 KT over three years. That kind of needle coke volume is coming from some new installation, or is it because capacity is getting closed? Yeah. That is the last question. Thank you. No problem. See, the way the graphite industry, as we just talked, is somewhere between 65%-70%. Similarly, presently, the needle coke capacities are also not running full because they're also tied to us. And these refineries, for big refineries, our suppliers, it's not difficult to switch over their focus from one product to other. Once the demand comes in, I'm sure when it makes business sense for them and they can see a long-term shift in demand, definitely, we expect them to increase their capacity because they have the technology, they have all the well-will. We have big refineries themselves. It's just about adding cokers or switching cokers from one grade of coke to another grade of coke. I don't think it'll be difficult for them. Yes, something happens temporarily, of course. It takes time for capacity to ramp up. See, everybody is banking on one thing that, yes, the shift to electric arc furnaces is clear that this is happening. This is an irreversible process. This will bring additional demand. That's also clear. The capacities which increase, which we have announced and another peer has announced, it's also going to take two and a half years to come. By the time, we are banking on the new electric arc furnace capacities. I don't think needle coke will be that much of a problem. Okay. Thank you. Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Akhilesh Kumar from Emkay. Please go ahead. Yeah. Thank you for the opportunity and congratulations on the good numbers. Sir, my first question is on the realization. When I take the said utilization of 90% for 2Q, I get the realization of around $3,500 per ton. Is it around the same levels of GE prices which you are tracking, or is it at some premium or discount if you can shed some light on that? We are in a very simple business. You can catch that turnover. When I say capacity utilization, I've said it for two quarters of 90% capacity utilization production-wise. In the same breath, I said that we sold more in Q2 versus Q1. If you put all this together, because I will neither be able to confirm the price nor deny the price, you're close. I won't be able to confirm the average price because it depends on all markets, all put together, grades, everything. Since we are only in graphite business, it's easy for you to calculate. Right. The only part where I am not clear is that, is it trading some kind of premium or discount? Let's say if I take a standard price of GE of $3,000, then I get a premium of around $500 per ton. Am I tracking on the right lines, or am I missing something here? My dear friend, as I said, I won't be able to confirm or deny it. I can only say, if it is helpful, that whatever price levels of today are actually at the bottom because you can see around peer group, it's very difficult to make margins at this price. Everybody in the industry hopes that this price should firm up from wherever they are today. They are one of the lowest we have seen in past years. We are expecting a firm up on prices. $3,000 plus $500 premium, I won't be able to comment on that, please. Yes, wherever they are, they are at one of the lowest. Okay. Okay. Got it. Sir, and my second question is on the general spread between the graphite and the needle coke prices. If you can guide us on that part. Okay. Spread is also at the same level for the last two to three quarters because electrode prices are where they are, and the needle coke prices have also not changed, and the electrode prices are also at that same level. The spread continues to be at the same level, and that converts. You cut out the variable costs and everything, and that's what you see in the profit figures. If I track the historical prices for these two, the spread generally comes out to be one-third for needle coke prices, it comes out to be one-third of GE prices. Is that trend still holding up? It is. The question you want to ask is not possible for me to answer, but yes, you have your own thumb rule. Maybe you have observed it in the past, but I won't be able to attach a formula to it that is needle coke prices are one-third. It is generally or vaguely, maybe, yes, you might be close, but then it changes. It changes with time, up and down. You have seen the industry. You know how it changes. Okay. Okay. Thank you, sir. Another question is on the utilization level. The kind of utilization we have seen in 1Q and 2Q, is this level of utilization expected to even go and extend it to FY 2027 and 2028 also? Oh, I think this year, FI 2026, is not a great year for the industry, and we are hoping for better days ahead in next year and another year because the moment the steel production is uptick and new capacities come in, we are expecting better demand levels in the next fiscal year, which will be helpful for capacity utilization also and firming of price also. Right. Good to have that kind of confidence. Sir, another question is on the graphite anode project. Basically, just want to get some unit metrics there, what kind of realizations we are expecting there, what kind of ROCs and debt to equity, how we are going to fund it. If you can shed some light on that project. Yeah. Puneeth ji, that will be answered by my colleagues, Puneeth ji and Ankur ji. So please go ahead, Puneeth ji. Ankur, you want to take first for on the business side? I'll take on the numbers. Yeah. In case of anode, I mean, the realizations are pretty as per the current market scenario, where also we are seeing an uptrend. Right now, we are pretty secured as far as our funds are also concerned. The financial production part is the production will start from 2027. We are pretty secure in all that. The market is quite stable because apart from China, people are expecting the new players to come up, and we are among the first ones to come up in the non-China anode space. Sir, what kind of IRR and EBITDA margin are we expecting from this project? We are expecting EBITDA margin in the range of about 30%, rather 35-40%. IRR also in quite encouraging numbers. Okay. Okay. Thank you, sir. Last one, if I can squeeze that in also. The question is that CapEx intensity looks higher than the competitor for the expanded 15,000 tons of capacity. We are doing INR 650 crores. Why is that happening if you can throw some light there also? Yeah. I'll take this question. See, you're comparing us with the peer group, and you might have also noticed that for the first part, I think they said one year, while we are saying two and a half years. That clearly shows that, of course, see, every plant has an opportunity to de-bottleneck some of the facilities. Some of the equipment has very long lead times. Some are shorter. I'll just restrict myself with that. We would not like to just say it on competitor. We can only talk about ourselves. Because, for example, if we have to expand, we have to see what we have, what we further need to take this capacity from X to Y. Similarly, everybody does that. I can't say what they have and what they're adding. I know what we have and what we're adding and what it requires to take up the capacity from 100 to 115. Would you say that the kind of CapEx intensity what we are having is the industry average or better than the industry average? If you put up a greenfield, see, we are adding this capacity in the existing plant. Of course, it will be lower. If you go and set up a greenfield plant and build every process right from scratch to finish, it will be more than double of that. You see, if you remember, in the last expansion of 20,000 tons, which we did, there was a CapEx of INR 1,200 crores. Now we are talking about 15,000 at INR 650 crores. You can now relate. You can relate the two things. That was probably a bigger requirement of more processes, more shops. It is probably lesser because 20,000 because we made a fresh plant mainly directed towards making nibbles. Right. Thanks. Thanks Thanks for this elaborated answer. Thank you. Thank you. The next question is from Rohit from ithought PMS. Please go ahead. Good afternoon, sir. Thank you for this opportunity. Sir, just on the overall industry, I mean, of course, China is a very big part of this industry. And we've been reading they've been talking about reducing their overall supply in steel. This is also further extended to other industries also where they've been talking about not trying to be too price competitive and price war kind of a thing. Have you seen any initial impacts of that trickling down to the GE, one, to the overall steel demand outside, I mean, steel exports from China, and hence any other production improvements in other countries because of the decline in steel from China? Two, as a downstream towards that, any impact on GE right now? How do you see, I mean, do you see any impact, if not yet? Do you see any impact of this happening if it plays out? Let me answer it in a way that you see, it's true what I mentioned in the opening remarks that Chinese production is down. And Chinese consumption is down even further. So actually, steel exports are increasing. They are exporting more steel to the world in 2025 than they did in 2024. Because the rest of the world is making about 50%-51% of the steel from electric arc furnace route, any exports of steel from China do impact the production levels in other all globe put as a whole ex-China. To that extent, yes, of course. If China was exporting less, the other countries which are more electric arc furnace based to the extent of 51%, they would be producing more steel. When they would be producing more steel, more electrodes would be required. That demands come to us, I mean, ex-China, all the industry. Yes, their exports matter. Their production is down. As I said, consumption is down even further. Actually, steel exports are increasing from China, which of course cause a dent. I mean, it's very clear. It will cause a dent to the rest of the world. Understood. Actually, one reads that they are curbing exports of steel also. They do not want exports to grow. At least that is what the news articles are from. At least that is what their intent is. I do not know whether there is a mismatch between the intent and what is happening, as clearly you are saying there is. Sir, I mean, of course, the last upcycle that happened between 2015 and, I mean, after 2017, there was a huge factor of China in that where they shut down capacities and. Absolutely. Absolutely. Capacities also. There was a talk of also EAF going up, China's share of EAF also going up. There are still, I mean, China is still saying that their share, while they could not do what they said last time, but they're still saying that their share is going to go up for them. How do you see it? It's an open-ended question, sir. I mean, I just want to get your sense because things seem to be somewhat coming together again. At least at the outside, things are somewhat from a China perspective, but there are sort of murmurs or talks which are pointing to what may have happened back in 2016, 2017, 2018, something similar. Do you see that as well, or is it still too hypothetical, and one should not really read too much into it? You see, you also keep hearing these talks of that they will take the electric arc furnace share to 20%. The reality is that they are still at 11%-12%. It is very difficult for us to hazard against what they will do or not do and how serious or how, as a country, they will actually take up the electric arc furnace portion. Of course, the rest of the world is at a much higher level of electric arc furnace share, and they are the lowest. We should remember that they are more than 55% of the total steelmaking of the world. Anything which they do towards electric arc furnace will be very helpful, I would say. There have been statements of taking it to 20%, but so far, years are passing by, but they have not yet reached that level. That speed which was announced that they will change over and do this and do that is not as much seen. That's all I can say, really. It's very difficult to answer your question. No, no. I understand. Sir, just one small addition to the if in terms of the plan of going from 11%-12% to 15% or 20%, does China have the capacity to last electric capacity to put more capacity for graphite electrodes? Yeah. They have a lot of capacity. Yeah, yeah. They have a lot of capacity of electrode making, most of which is the HP-grade variety, and some of it is UHP-grade variety. Internally, within China, there are many electrode companies making electrodes. They are exporting a lot of electrodes, which are predominantly HP-grade, to other countries. Internally, if the EAF goes up, actually, it will be helpful because they'll be able to use their excess capacity of electrodes within China and not impact the rest of the world with their exports. Last question, you are one of the largest shareholders of GrafTech. I mean, what are your thoughts on them? I mean, is it purely a financial investment for you, or are you also thinking about, I mean, backward integrated, as you've also highlighted? As we speak, it's purely investment. As we speak. Okay, sir. Thank you very much, and all the very best. Thank you very much. Thank you. Thank you. Next question is from Amit Lahoti from Emkay. Please go ahead. Thanks for the chance again. When we say needle coke refineries can bring in new capacity faster than typically what graphite electrode players can do, would it be fair to say that our pricing power would be better than them when the demand turns? Is that a right understanding? See, their electrode prices and needle coke prices, they go in tandem. When electrode prices go up, of course, they won't be left behind, and they would also like a share of the good times or profits. Of course, as we have seen, you must have noticed in 2017, 2018, and 2019 that needle coke prices went up very high because electrode prices were also high. It follows with a lag. Once electrode prices start to firm up and needle coke prices start to firm up, that's usual. From a demand-supply perspective, when we say that they can bring new capacity faster than us, they can come into oversupply also, which is faster than the graphite guys. With that respect, their price hike should be lower than the graphite guys. That is what I was thinking. Let me clarify this point. See, these are big refineries or these needle coke plants are attached to refineries. They have the technology, and they have their cokers and everything is there. They have all the wherewithal to increase. Rather than a new company coming in and setting up a needle coke plant, they will be faster. That's what I meant when I said that when the needle coke suppliers, when they see an actual step-up of requirement, they have all the technology, the resources, and the wherewithal to increase their capacity better than any new player coming in. Okay. Understood. Yeah. Then secondly, in the last quarter, we were highlighting expectation of improvement in demand in second half of FY 2026. I realize that expectation still remains, but any incremental color you could provide specifically on Q3, which is the running quarter? Q3 is going to be, it's going to remain the same. We keep hoping about it, but things are just not, they're taking time to turn around. See, the steel production, just look at steel production. Every time there's a forecast from World Steel Association, the next year this will happen, that will happen. When the year comes, it doesn't happen. You see what the geopolitical situation is. Once that economic boom is there, then the steel follows the economic boom, and so will the electrode demand. The comments which we made earlier, there we are hoping that they should be firming in price. If you're asking about the quarter which we are already in, no, it is taking time to happen. No, it's not happening this quarter or next. The moment we see an uptake, it should be a quick turnaround. Understood. Yeah. Thank you. Thank you. Thank you. Thank you. The next question is from Ahmed Madha from Unifi Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, I had this question. So current quarter utilization is so high. Is there an element of bunching up of shipments to the U.S. or anything as such, or you think Q2's utilization is sustainable in second half also based on your visibility of contracts and volumes? Okay. For the first two quarters which went by, as I said, it is slightly above 90. I also said that by the time we close the year, we should be around that figure, close to 90, little less than 90. That is it. We should be able to sustain this. It is not about U.S. orders getting bunching up quarter to quarter sales. Historically, if you see, it varies which orders are there, what deliveries we have, what order book we have. You can see if you compare with 2024, 2025, where we were at 80%. Now, first half, we are at 90%. We hope in the next two quarters also, we should be close to that level. Should be close, maybe marginally under 90, marginally over. You can see a clear difference between the 80s of 2024, 2025 versus the 90 of 2025, 2026, or slightly under 90. It is very difficult to hazard, I guess, because you see we are booking orders quarter by quarter. As we speak, I can still be reasonably confident about the quarter we are in. Year-to-March, order book is still being booked. Okay. Got it. In terms of U.S. market, assuming the tariffs do not go down quickly, in that case, next year, we have to diversify volumes from U.S. to non-U.S. markets. In that case, what will be the realization gap for us in U.S. market and non-U.S. markets where you think you can sell the volumes? I wish I had an answer, but we'll cross the bridge when we come to it. Right now, we are living with the hope that as all the trade deals all over globally have been almost done, only we remain, and we are really hoping that it settles down. As I was saying, there was some news floating around yesterday, and I was looking for confirmations about anything happening between the U.S. and India. Yes, the talks are on. They're not stalled. That's what we believe, that both the countries are talking to each other. There may be some tricky issues to resolve. I think with India, globally, only India is at 45%. Maybe I think Brazil is also of that level. Let's see. I can't comment more than that, except saying that we'll cross the bridge when we come to it. Sure. Regarding the non-Indian competitors, obviously, everyone else closed down one or two of their efficient plants. How do you see, because today, they are at break-even, right? Break-even in terms of their profitability. Is there a scope or a discussion of those players thinking of price hikes so that they can come to a certain level of profitability, and eventually, we can also later come up with price hikes? Is there any sort of such discussion for new contracts, or is it far away? See, I have seen some public announcements. Everybody says all the industry needs a price increase to have healthy margins and to continue expanding, continue doing that. That is about it. Now, when the 2026 orders open up, we will see how much is happening on the ground. Right now, we are in November. Once the time comes, we will see. There may be one, two, three months. We will see how much price firming up is happening or not happening. The demand is still subdued, but the graphite industry as a whole, everybody needs a price increase. Got it. Last question. In terms of our European business, can you give what share of our volumes come from Europe region? If there are duties as there is discussion going on and import quotas, I'm assuming the production of European players will go up. In that case, do you see any sort of benefits coming to us next financial year? See, this is going to happen in 2026. When they announce what they announce, it will actually depend on that. The steel quotas they are talking about and CBAM, all is going to happen in 2026. What is the quantum, we will know next year. How much impact will it have, how much there will be internal increase in production within EU. I can't say today, really, honestly. Okay. Can you tell what is our share of volume from Europe? I would say. U.S., you said 10%-12%? For Europe? 10%-12%. We are very well in all economies. We are actually quite evenly spread. If I hazard, I guess maybe it is around close to, let's say, little less than 10%. Okay. Sure. Thank you so much. Thank you. The next question is from Rohan Baranwal from Arihant Capital. Please go ahead. Thank you very much, sir, for the opportunity. My question is on the margin side. What kind of margin improvement are we looking at going forward in FY 2026, sir? How will it improve going forward? Will it be coming from the side of price normalization or from the side of cost benefits, sir? Minumum prices continue to be where they are. They are not increasing, not decreasing. The electrode prices, as we already in Q3, half of Q3 is already gone. Here, in Q3, we do not see any margin improvement. Q4, order book is under construction. We will see how it plays because, as I just said, we are booking quarter by quarter. That is what is happening in our industry. I do not have any, had I some long-term orders, even if I was booked for, let's say, 60-70% of the volumes, like in good times, it used to happen that way. We are not, just booking quarter by quarter. If there is any uptick, maybe in January to March, I cannot say. This quarter does not seem because half of it is already gone. Margins will be similar to the last two quarters, I would say. In the long term also, sir? No, in long term, of course, we are putting expansion, doing this and doing that. We, of course, expect that with the kind of demand which should come in because with new electric arc furnaces, demand should go up. Prices should also firm up. I'm only talking about these next two quarters, the Q3 and the Q4. Medium to long term, we are, of course, bullish about the electrode industry. Got it. So any numbers to put on that side, sir? No, not possible. I wish it was, but it is not. Thank you, sir. Sir, one last question is on the debt side, actually. Can you provide a timeline of how much debt we are expecting to add going forward, like in FY 2026 or FY 2027, sir? No, we have already, yeah. We already explained in our opening remarks that we are long-term debt-free, and we are not going to add any debt in future also. Got it. Got Got it. Thank you. That is my answer to your question. Thank you very much, sir. Thank you. Thank you. Next question is from Ahmed Madha from Unifi Capital. Please go ahead. Yeah. I I just wanted to understand when you say the new EAF capacity is coming up globally. I mean, obviously, we can search a bit and see what kind of capacity are coming up. In your sense, over FY, not FY 2026, rather CY 2026 and CY 2027, what sort of capacity do you see coming up in electric arc furnaces? Is there any math around it to understand incremental demand for electrodes? It's about 20 million tons, which should get added next two years, 2026 and 2027. If you roughly divide it by, let's say, 1.5 kg per ton, that translates to about 30,000 tons demand increase. I'm just talking about next two years. Okay. In terms of inventory situation, is the steel industry as a whole, do they have a lot of inventory for electrodes available, or are they keeping low inventories currently, considering prices have been falling for the last few quarters? Now, it is quite stable. There's no over-inventory of electrodes with our customers. It's the usual self. Depending on which country you are, somebody gives a month. If they're suppliers locally, somebody gives two months if they are an offshore supplier. The steel industry, I believe, has a normal level of inventories today. There's no over-inventory situation with our customers because we can see from the buying behavior also that they're consistently buying, buying, and exactly as their demand is. I don't think there is an over-inventory situation with steel customers. In terms of China's supply of electrodes, right, with the new demand coming up, either because of the increase in non-China steel production or with the new EF capacity, is it possible that the incremental demand goes to Chinese people who are probably selling the product at lower prices? Are they increasing their own supply? Is there any sense we have? See, we are also a competitive cost producer, just because of our size being big at one location in India. I think we are in a good position to compete. Yeah, of course, this low pricing and this, of course, it hurts. Still, we also have a reasonable level of cost. We should be able to compete in the market. Again, the Chinese capacity which they have is predominantly on the HP-grade variety and lesser on the UHP-grade variety. Yeah, we have to survive. We have to be competitive at all times. Okay. Is there any sense on China's supply of electrodes we have? Has there been any new capacity addition, deletions in recent quarters or recent years? What I can read is I think the capacity is broadly similar. That is my sense from the public. Similar. Yeah, it's similar. They have not added. They have not deleted either. So they're at the level which they were. Maybe in the last three years, the capacities of electrodes have remained at that same level. They have not increased it. Okay. Sure. That is from my side. Thank you so much, sir. Thank you. Thank you very much. That was the last question in queue. As there are no further questions, I would now like to hand the conference over to Mr. Gulati for the closing remarks. Thank you. Thank you very much, friends, for listening to our Q2 conference call. Hopefully, when we talk next quarter or next, maybe we'll be able to provide a better outlook for 2026. Thank you so much. Thank you very much. On behalf of SKP Securities Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines. Thank you. Thank you.