HEG Advanced Materials Plans ₹5,500 Crore Expansion After Demerger, Led by Anode-Materials Capacity
HEG Advanced Materials has lined up approximately ₹5,500 crore of capital expenditure for its post-demerger growth strategy, with synthetic graphite anode materials set to receive the largest share of investment as the company targets 60,000 tonnes of annual capacity by FY32.
The expansion represents a major strategic shift for the LNJ Bhilwara Group company following the separation of its traditional graphite-electrode business.
HEG Advanced Materials will now concentrate on:
synthetic graphite anode materials,
battery energy solutions,
green-power generation,
and:
graphene-based advanced materials.
The company plans to finance the approximately:
₹5,500 crore
investment programme through around:
₹1,500 crore of equity
and:
₹4,000 crore of debt.
That represents a funding mix of roughly:
27% equity and 73% debt.
HEG Advanced Materials is targeting steady-state returns by FY30, including a return on capital employed of approximately:
17%.
At the centre of the growth plan is its synthetic graphite anode-material business, where the first commercial-scale 20,000-tonne plant is already under construction and production is targeted to begin in the first quarter of FY28.
Longer term, the company plans to increase capacity to:
60,000 tonnes by FY32.
₹5,500 Crore Capex Defines Post-Demerger Strategy
The investment programme establishes a clear capital-allocation roadmap for HEG Advanced Materials following the demerger.
The company is moving away from being viewed primarily through the economics of:
graphite electrodes
and creating a separate growth platform exposed to:
batteries,
electric mobility,
energy storage,
renewable power,
and advanced carbon materials.
Chairman, Managing Director and Chief Executive Officer Riju Jhunjhunwala has said the demerger is intended to unlock value while giving investors focused exposure to each business.
The separation also gives the two companies greater flexibility to make:
independent capital-allocation,
funding,
partnership,
and acquisition decisions.
Anode Materials Will Receive Largest Share of Investment
Synthetic graphite anode materials represent the largest individual growth opportunity within the new structure.
Anodes are one of the fundamental components of:
lithium-ion batteries.
They store lithium ions while a battery is being charged and release them during discharge.
Graphite remains the dominant anode material used in conventional lithium-ion cells.
That makes anode manufacturing strategically important as demand expands across:
electric vehicles,
stationary battery storage,
consumer electronics,
and other energy-storage applications.
HEG Advanced Materials intends to build a large domestic manufacturing position in this segment.
Capacity Target Set at 60,000 Tonnes by FY32
The company ultimately plans to establish annual anode-material capacity of:
60,000 tonnes
by:
FY32.
If successfully executed, the expansion would position HEG Advanced Materials among the larger synthetic graphite anode-material producers outside China.
The strategy is particularly significant because the global anode supply chain remains highly concentrated in:
China.
Battery manufacturers and governments are increasingly seeking geographically diversified supply chains.
India therefore has an opportunity to build domestic manufacturing capacity for materials that are critical to the battery industry.
First 20,000-Tonne Plant Already Under Construction
HEG's immediate priority is to commercialise the first:
20,000 tonnes
of annual synthetic graphite anode-material capacity.
Production from the first phase is targeted to begin in:
Q1 FY28.
The project has already advanced substantially.
Engineering work has been:
completed,
while procurement is approximately:
85% complete.
The facility has also been designed with expansion in mind.
Its capacity can subsequently be increased to approximately:
30,000 tonnes.
Demonstration Plant Has Been Operating for 12 Months
Before moving to commercial scale, HEG has been operating a:
200-tonne demonstration plant
at:
Mandideep, Madhya Pradesh.
The plant has been operational for approximately:
12 months.
The demonstration facility allows the company to validate:
manufacturing processes,
product consistency,
material specifications,
and customer requirements
before commissioning a much larger commercial plant.
This stage is particularly important in battery materials because cell manufacturers typically conduct extensive qualification processes before approving a supplier.
Samples Have Qualified With Global Cell Manufacturers
HEG has indicated that samples produced at the demonstration facility have already been:
qualified by global cell manufacturers.
Customer qualification is a strategically important milestone.
Battery manufacturers require anode materials to meet demanding standards around:
purity,
particle characteristics,
cycle life,
charging performance,
consistency,
and safety.
Commercial-scale production therefore involves significantly more than simply manufacturing graphite.
The material needs to perform consistently within a customer's battery chemistry and manufacturing process.
Synthetic Graphite Is Central to Fast-Charging Strategy
HEG Advanced Materials expects synthetic graphite to remain an important anode chemistry, particularly where:
fast charging
is required.
Synthetic graphite generally offers highly controlled material characteristics because it is manufactured through an industrial process rather than extracted directly as natural graphite.
Those characteristics can be attractive for battery applications requiring:
consistency,
cycle performance,
and faster charging.
As electric-vehicle charging times become an increasingly important competitive factor, advanced anode materials could become more strategically valuable.
Indian Battery Cell Capacity Could Reach 250 GWh by 2035
HEG expects India's domestic battery-cell manufacturing capacity to rise to approximately:
250 GWh by 2035.
That expansion would create substantial local demand for battery materials.
India is building battery-cell capacity to support several fast-growing markets, including:
electric cars,
electric two-wheelers,
electric commercial vehicles,
renewable-energy storage,
and industrial backup systems.
The more battery cells India manufactures domestically, the greater its requirement for:
anode materials,
cathode materials,
electrolytes,
separators,
and other battery components.
Indian Graphite-Anode Demand Could Exceed 100,000 Tonnes
HEG expects graphite-anode demand in India to surpass:
100,000 tonnes by 2030.
That creates a substantial addressable market for domestic suppliers.
HEG's planned 60,000-tonne capacity should therefore be viewed against a much larger battery-manufacturing ecosystem developing across India.
Domestic supply could also help battery-cell manufacturers reduce reliance on imported materials.
That is increasingly important as companies focus on:
supply-chain security,
localisation,
and shorter procurement networks.
China Dominates Global Anode Supply Chain
One of the strategic attractions of HEG's investment is the concentration of global graphite processing in China.
China currently occupies a central position across multiple stages of the lithium-ion battery supply chain.
That includes:
graphite processing
and:
anode-material production.
Automakers and battery manufacturers outside China are increasingly seeking alternative suppliers.
A commercially competitive Indian producer with sufficient scale could therefore target both:
domestic demand
and:
international customers.
HEG Has Existing Expertise in Graphite
HEG's move into battery anodes is not disconnected from its historical business.
The group has decades of experience working with:
graphite,
high-temperature manufacturing,
carbon processing,
and specialised industrial materials.
Its traditional graphite-electrode operations serve the steel industry.
Synthetic graphite anode materials require a different product and manufacturing framework, but the broader expertise in carbon materials provides a technological foundation for diversification.
Demerger Separates Advanced Materials From Graphite Electrodes
The expansion follows the implementation of HEG's composite scheme of arrangement.
The scheme became effective on:
September 1, 2026.
Under the restructuring, the company's traditional graphite-electrode business has been transferred to:
HEG Graphite Limited.
That company is proposed to be renamed:
HEG Limited
and operate as a separately listed pure-play graphite-electrode company.
The existing listed entity has been renamed:
HEG Advanced Materials Limited.
September 7 Is Record Date for Demerger
The company fixed:
September 7, 2026
as the record date for determining shareholder entitlement under the demerger.
Shareholders are entitled to receive:
one fully paid-up equity share of HEG Graphite for every one share held in HEG Advanced Materials.
This represents a:
1:1 entitlement ratio.
The restructuring effectively divides the previous HEG business into two investment propositions.
One is centred on:
graphite electrodes.
The other is focused on:
advanced materials and energy infrastructure.
HEG Graphite Expected to List in October
HEG Graphite is expected to be separately listed on:
BSE
and:
NSE
in the second half of:
October 2026.
Until that listing takes place, investors should distinguish between movements in the quoted HEG Advanced Materials share price and the combined economic value of both businesses.
The demerger structurally reallocates value between:
HEG Advanced Materials
and:
the new graphite company.
Apparent Share-Price Drop Reflects Demerger Adjustment
HEG shares appeared to register an unusually steep fall of nearly:
64%
on September 7.
However, the movement was largely a consequence of the:
demerger price adjustment
rather than an equivalent destruction of shareholder value in a single session.
The graphite-electrode business has been separated from the listed entity.
Eligible shareholders will receive shares in the resulting graphite company based on the 1:1 entitlement.
The standalone market price of HEG Advanced Materials therefore no longer represents the value of the pre-demerger combined company.
Advanced Materials Gets Independent Growth Strategy
The demerger allows HEG Advanced Materials to establish a capital-allocation framework specifically designed for:
high-growth emerging sectors.
These businesses have different characteristics from graphite electrodes.
Graphite-electrode demand is strongly linked to:
steel production,
particularly electric-arc-furnace steelmaking.
Battery materials, by contrast, are driven increasingly by:
EV adoption,
energy-storage deployment,
battery-cell manufacturing,
and global supply-chain diversification.
Separating the businesses allows investors to evaluate those risk and growth profiles independently.
Green Power Will Help Support Expansion
The post-demerger company also contains a substantial:
green-power business.
Management expects cash generated by its hydroelectric operations to contribute toward funding the:
anode
and:
graphene development programmes.
This creates an internal funding source within the broader advanced-materials platform.
The stable cash-flow characteristics of operating power assets can help balance the heavier investment requirements of new manufacturing businesses.
Green-Power Capacity Targeted at 680 MW
HEG Advanced Materials plans to increase its green-power generation capacity from approximately:
292 MW in FY26
to:
680 MW by FY28.
That represents a substantial increase within a relatively short period.
The portfolio includes:
hydropower,
solar,
and energy-storage projects.
The strategy combines operating renewable assets with the company's growing battery and energy-storage activities.
300 MWp Solar Project Planned in Chhattisgarh
One of the major projects under development is a:
300 MWp solar project
in:
Chhattisgarh.
The company is targeting commissioning around:
Q2 FY28.
Solar generation can provide another source of long-duration infrastructure cash flow while increasing HEG Advanced Materials' exposure to India's renewable-energy transition.
The project also complements the company's activities in:
battery storage
and:
energy solutions.
200 MWh Battery-Storage Project Under Development
The company is also developing a:
200 MWh battery energy-storage project
in:
Gujarat.
The project is targeted for:
Q3 FY27.
Battery-energy storage systems can absorb electricity when supply is plentiful and release it when required.
Their importance is increasing as India adds more:
solar
and:
wind generation.
Unlike conventional thermal generation, renewable output changes with:
sunlight
and:
wind conditions.
Storage helps manage that variability.
Replus Capacity to Rise From 1 GWh to 6 GWh
HEG Advanced Materials also owns a controlling interest in:
Replus Engitech.
Replus currently has approximately:
1 GWh
of battery-energy-solutions manufacturing capacity.
The company plans to increase that figure to:
6 GWh
by the second half of FY27.
A:
5 GWh production line
is currently under construction.
Certification Targeted by Q4 FY27
Certification for Replus' new battery-energy-solutions capacity is targeted by:
Q4 FY27.
Scaling to 6 GWh would materially increase the company's ability to serve India's expanding energy-storage market.
Potential demand comes from:
grid-scale battery projects,
commercial and industrial customers,
renewable-energy projects,
and other electricity-storage applications.
The storage business therefore complements HEG's battery-materials investment.
Anode Materials and BESS Address Different Parts of Battery Value Chain
HEG Advanced Materials is unusual in that it is building exposure to multiple parts of the emerging battery ecosystem.
Synthetic graphite anodes are:
materials used inside battery cells.
Replus operates further downstream in:
battery-energy systems and solutions.
The company therefore participates in both:
battery-material manufacturing
and:
storage-system deployment.
This creates potential strategic synergies while also diversifying revenue sources.
Graphene Is Another Emerging Growth Business
HEG Advanced Materials is also developing a:
150-tonne graphene business.
Graphene is an advanced carbon material known for characteristics including:
high electrical conductivity,
strength,
and:
low weight.
Commercial applications remain at varying stages of development, but HEG sees potential across several industries.
Target uses include:
road infrastructure,
textiles,
paints,
coatings,
lubricants,
data centres,
and:
advanced battery anodes.
Graphene Could Create Higher-Value Carbon Products
The graphene strategy reflects the company's broader ambition to move into:
higher-value advanced carbon materials.
Traditional industrial graphite products can be cyclical and commodity-sensitive.
Advanced materials can potentially provide:
greater differentiation,
specialised applications,
and higher technological barriers to entry.
However, commercialising graphene at scale remains more uncertain than established businesses such as graphite electrodes or renewable-power generation.
Execution and customer adoption will therefore be critical.
Hydro Assets Provide Cash-Flow Foundation
The post-demerger company also incorporates the group's hydro-power interests following the amalgamation of:
Bhilwara Energy Limited.
The power portfolio provides comparatively steady operating cash flows.
Management expects those cash flows to help:
self-fund parts of the anode and graphene roadmap.
This is important because HEG Advanced Materials' ₹5,500 crore expansion requires significant capital before some of the new manufacturing operations reach full utilisation.
₹4,000 Crore of Debt Planned
Approximately:
₹4,000 crore
of the overall capex programme is expected to be financed through:
debt.
That means borrowings will represent the majority of the funding mix.
The use of debt can improve equity returns when projects achieve expected operating performance.
However, it also increases the importance of:
commissioning schedules,
capacity utilisation,
cash generation,
and interest costs.
Delays in large manufacturing projects could increase financial pressure if debt begins accruing before commercial revenues reach expected levels.
₹1,500 Crore Expected Through Equity
The remaining approximately:
₹1,500 crore
is planned through:
equity.
This should provide part of the capital needed to support the expansion without relying entirely on leverage.
The resulting 27:73 equity-to-debt mix indicates that HEG Advanced Materials is willing to use significant balance-sheet financing to accelerate its growth.
The attractiveness of the strategy will ultimately depend on whether operating returns exceed:
the company's cost of capital.
HEG Targets 17% ROCE
Management is targeting steady-state:
return on capital employed of approximately 17%
by:
FY30.
ROCE is an important measure for a capital-intensive expansion programme.
It assesses how effectively a company generates operating returns from the capital committed to the business.
A ₹5,500 crore investment programme can create considerable revenue growth.
But shareholder value depends on whether those investments generate attractive returns after considering:
debt,
depreciation,
operating expenses,
and execution risk.
FY30 Is Important Milestone
The FY30 target suggests that HEG expects the new businesses to require several years to:
commission,
ramp up,
qualify customers,
and reach efficient utilisation levels.
This is normal for advanced-material manufacturing.
A plant may be mechanically completed before it reaches full commercial production.
Battery customers can require lengthy qualification and validation processes.
The period between construction and steady-state production can therefore be significant.
Customer Qualification Is Key Execution Risk
The commercial success of the anode business will depend heavily on:
customer qualification.
Battery-cell manufacturers cannot easily switch critical materials without extensive testing.
A supplier needs to demonstrate consistent performance across:
multiple production batches
and often across:
extended battery testing cycles.
HEG's successful demonstration-plant qualification is encouraging, but commercial-scale production will still need to meet similar standards.
Manufacturing Scale Must Preserve Material Consistency
Moving from:
200 tonnes
to:
20,000 tonnes
is a major scale-up.
The engineering challenge is not simply producing more material.
HEG must replicate product characteristics consistently across vastly greater manufacturing volumes.
Battery performance can be affected by relatively small differences in:
particle size,
purity,
surface characteristics,
and material structure.
Process control will therefore be central to the commercial ramp-up.
EV Growth Supports Long-Term Demand
Electric vehicles remain one of the most important sources of expected battery demand.
India is seeing expanding adoption across:
two-wheelers,
three-wheelers,
passenger vehicles,
buses,
and commercial fleets.
Each vehicle requires a battery pack containing multiple materials.
As battery production localises, demand for domestic anode-material suppliers should rise.
However, market growth will depend on:
EV adoption,
battery prices,
cell manufacturing,
and government policy.
Energy Storage Could Become Equally Important
Stationary energy storage represents another major source of demand.
India plans substantial additions of:
renewable electricity.
Solar generation peaks during daylight hours, while electricity consumption frequently peaks at other times.
Battery storage can shift electricity from one period to another.
As storage installations increase, battery-cell demand could expand beyond the automotive sector.
That broadens the addressable market for HEG's synthetic graphite anodes.
Advanced Materials Business Could Gain Export Opportunity
HEG is not necessarily limited to Indian battery manufacturers.
If its material meets international specifications and production becomes competitive, the company can target:
global cell makers.
This could become particularly important as manufacturers outside China seek alternative sources of critical battery materials.
India offers potential advantages including:
engineering expertise,
manufacturing capabilities,
and a growing domestic battery ecosystem.
The challenge will be competing globally on:
quality,
cost,
scale,
and delivery reliability.
Demerger Gives Investors Two Different Businesses
The restructuring creates two companies with markedly different investment characteristics.
HEG Graphite will remain focused on:
graphite electrodes,
steel-sector demand,
and established industrial operations.
HEG Advanced Materials will carry greater exposure to:
battery-material growth,
renewables,
storage,
graphene,
and project-development risk.
Investors can therefore assess the two businesses independently rather than applying a single valuation to a combined company.
HEG Graphite Also Plans Capacity Expansion
The separated graphite-electrode business is not standing still.
HEG Graphite plans to increase electrode capacity from approximately:
100,000 tonnes in FY26
to:
115,000 tonnes by FY29.
It also retains:
66 MW of captive thermal power
and:
13.5 MW of hydropower capacity.
In addition, the company holds a strategic investment of approximately:
9.98% in US-based GrafTech.
The demerger therefore separates two businesses that both have their own expansion strategies.
Independent Funding Could Enable Future Acquisitions
Management has highlighted funding flexibility as an important benefit of the restructuring.
Each company can now potentially raise:
equity,
debt,
or strategic capital
based on its own requirements and economics.
The new structure also gives both entities cleaner platforms for:
acquisitions
and:
partnerships.
For HEG Advanced Materials, partnerships could be particularly relevant as battery supply chains become more global and technologically specialised.
India Is Building Domestic Battery Supply Chain
HEG's expansion reflects a wider industrial shift.
India wants to move beyond assembling:
battery packs
and increase domestic manufacturing of:
battery cells
and:
critical materials.
Building the entire ecosystem can reduce dependence on imported components and improve:
energy security,
industrial capability,
and supply-chain resilience.
Anode materials represent one important piece of that ecosystem.
Battery Materials Require Long-Term Capital
The economics of battery-material manufacturing differ from those of relatively asset-light businesses.
Large facilities require:
significant upfront capital,
technology development,
qualification periods,
and operating scale.
That means companies need patient funding before returns become visible.
HEG's ₹5,500 crore capex programme is therefore a long-duration industrial investment rather than a short-term capacity addition.
Execution Will Determine Value Creation
The scale of HEG Advanced Materials' opportunity is significant.
But so are the execution requirements.
The company must simultaneously deliver:
anode-material plants,
battery-storage manufacturing,
renewable-power projects,
graphene commercialisation,
and financing.
It must also manage the organisational transition created by the demerger.
Success will depend on meeting:
construction schedules,
customer qualifications,
capacity-utilisation targets,
and return thresholds.
Conclusion
HEG Advanced Materials has set out an approximately ₹5,500 crore post-demerger investment programme designed to transform the company into a diversified advanced-materials and clean-energy platform, with synthetic graphite anode materials positioned as its largest growth engine.
The company plans to increase anode-material capacity from an initial 20,000 tonnes to 60,000 tonnes by FY32, with commercial production from the first phase targeted for Q1 FY28. Engineering for that project is complete and procurement is approximately 85% finished, while a 200-tonne demonstration facility has already supplied qualified samples to global cell manufacturers.
The expansion extends well beyond anodes.
HEG Advanced Materials plans to grow battery-energy-solutions capacity from 1 GWh to 6 GWh, increase green-power capacity from 292 MW in FY26 to 680 MW by FY28, develop a 200 MWh battery-storage project in Gujarat, build a 300 MWp solar project in Chhattisgarh, and expand its graphene activities.
Approximately ₹1,500 crore of the ₹5,500 crore investment is expected to come from equity and ₹4,000 crore from debt, with management targeting steady-state ROCE of around 17% by FY30.
The demerger gives the advanced-materials business independent access to capital and separates it from HEG's established graphite-electrode operation.
The strategic opportunity is substantial: India's battery-cell manufacturing base is expanding, domestic graphite-anode demand could exceed 100,000 tonnes by 2030, and global customers are seeking greater supply-chain diversification outside China.
For HEG Advanced Materials, the next several years will therefore be defined by whether it can convert its historic expertise in graphite into a commercially scaled position across battery materials, energy storage, renewable power and advanced carbon technologies.