India Ratings Assigns 'IND A-' Rating to TACC Limited's Bank Loan Facilities for Synthetic Graphite Project

India Ratings Assigns 'IND A-' Rating to TACC Limited's Bank Loan Facilities for Synthetic Graphite Project​

India Ratings and Research (Ind-Ra) has assigned a credit rating to the bank loan facilities of TACC Limited, a wholly owned subsidiary of HEG Limited. The assigned rating is 'IND A-', with an Outlook Stable.

The rating provides insights into the financing structure and operational risks associated with TACC’s synthetic graphite anode manufacturing project.

Instrument Rating Details​

Ind-Ra provided the following details regarding the instruments:

Analytical Approach and Parentage Support​

The rating was based on a assessment of TACC’s standalone profile, considering the support from its 100% parent company, HEG Ltd. The parent company, post amalgamation into HEG Greentech, holds an 'IND AA-' / Rating Watch with Developing Implications rating. This reflects the strong legal, operational, and strategic linkages between TACC and HEG following the demerger of HEG Greentech.

The ratings reflect TACC's strong parentage, with HEG/HEG Greentech demonstrating significant commitment through equity infusion, quasi-equity support, and guarantees for project debt. Ind-Ra believes TACC is crucial to the LNJ Bhilwara group’s long term strategy of establishing an integrated energy transition platform.

Project Financing and Structure​

TACC was incorporated in 2022 to set up a synthetic anode manufacturing facility with an installed capacity of 20,000 tonnes per annum (TPA) at Sirsoda Industrial Area in Dewas, Madhya Pradesh. The estimated project cost is INR18,927 million and is funded through a debt-to-equity ratio of 65:35.

The financing structure includes:

• A sanctioned term loan facility of INR12,030 million from State Bank of India (SBI).
• An ancillary Capex Letter of credit (Sublimit of Term loan) for INR4,500 million from SBI.
• Optionally convertible debentures (OCDs) worth INR4,000 million at a nominal 0.01% coupon rate over 10 years.
• Equity infusion of INR1,600 million as of the end of March 2026.

The total project funding required from the sponsor is estimated at around INR6,620 million, with 88% having been infused by the end of March 2026. The term loan has a tenor of approximately 12 years, including construction and moratorium periods, and includes adequate debt protection mechanisms such as a Debt Service Reserve Account (DSRA).

Market Dynamics and Risk Factors​

Demand Outlook: Ind-Ra noted that the demand outlook for synthetic graphite anode material is favorable. This is driven by policy-led domestic capacity expansion under India's Production Linked Incentive scheme for advanced chemistry cells, coupled with export potential as part of the China Plus One strategy. Management reports ongoing discussions for long term offtake agreements covering the complete 20,000 TPA capacity in the near term.

Strengths:

• Strong parental support from HEG/HEG Greentech.
• Favorable demand outlook supported by policy push and import substitution opportunities.
• Comfortable funding visibility with financial flexibility provided by the parent company.

Weaknesses:

• Exposure to raw material price fluctuations and import dependency for anode grade low sulphur green pet coke.
• Project execution, technology, and stabilisation risks due to the greenfield nature of the project and the complexity of the graphitisation process.
• Operations are expected to be working capital intensive.

Financial Projections: Ind-Ra estimates that gross margins could reach around 55% and EBITDA margins around 30%, with the project remaining comfortable for debt servicing even at an EBITDA margin of about 20% over the loan tenure. The company is expected to manage operations in a working capital intensive manner, aiming for a net working capital to revenue ratio between 25% and 30%.

Liquidity: Ind-Ra estimates the average Debt Service Coverage Ratio (DSCR) for the project to be comfortable at around 1.6x. The repayment burden is eased during the initial years of operations, with scheduled debt repayments amounting to INR677 million in FY29 and INR1,044 million in FY30.

HEG Stock Price Movement​

Shares of HEG Limited slipped on Tuesday, closing at ₹566.45 after shedding 1.6% from the previous close. The equity traded within a range between a day low of ₹565 and a high of ₹579.7, amidst trading activity involving over 1.3 million shares.