INTRODUCTION

A graphite electrode is a device to conduct electricity down into an electric arc furnace, which generates
sufficient heat to melt scrap steel. These electrodes are key components of conductive power systems
used to produce steel, aluminum and other non-ferrous metals.

The manufacture of Graphite Electrode requires a high degree of technical competence and expertise,
as it is a technology-intensive process that involves heat-treating non-graphitic carbon to temperatures
upto 3000oC, with the quality of output being a key success factor.

Graphite electrodes are consumed primarily in the electric arc furnace (EAF) route of steel production,
the steel making technology used by “mini-mills”. The size of the electrodes varies depending on the size
of the furnace. The consumption rate generally is one graphite electrode every eight to ten operating
hours; the actual rate of consumption and addition of electrodes for a particular furnace depends
primarily on the efficiency and productivity of the furnace. There is no commercially viable substitute for
graphite electrodes in EAF steel making
 Economic Analysis for graphite electrode sector

The Indian graphite sector is currently going through a phase of global outperformance in a technology
intensive industry on the back of cost competitiveness and sound operations of domestic graphite
producers.

The performance of the sector is linked to the performance of the steel sector. Steel industry has shown
phenomenal growth in recent times. Steel demand suffered a sharp drop from Q4CY08 and through
much of 2009. This was on account of the global financial crisis that led to a severe drop in EAF steel
production and the resultant graphite electrode demand. With the recovery in steel production growth
firmly in place, graphite demand is expected to increase by 17% YoY in 2010 on the back of steel
production scaling back to pre-crisis levels.

Major steel manufacturers are optimistic about the industry’s future and have planned further addition
to the existing capacities. With growing global steel production and strong consumption levels the
demand for graphite electrodes is expected to be buoyant.

Moreover Capacity expansion is underway and low cost operations are ensuring better margins as
compared to global peers. Hence, Indian graphite companies expected to continue their
outperformance over international players and increase their share in the global graphite market from
13% in 2009 to 18% in 2012E