Electrosteel Castings to Establish Major DI Pipe Plant in Odisha, Signals Massive Expansion

Kolkata, 20 May 2024 – Electrosteel Castings Ltd (ECL), a leading producer of ductile iron pipes in India, has announced a significant expansion with plans to set up a new DI pipe and fittings plant in Odisha. The decision was made during the board meeting held on Monday, where the fourth quarter and FY24 results were also finalised.

This ambitious project involves acquiring a 500-acre plot in Odisha, marking the Kejriwal family’s renewed focus on large capital expenditures. “We are working out the capacity of the new plant and the investment required. It should be ready in a couple of months,” a company official revealed.

The proposed greenfield plant is expected to have a capacity of up to 0.5 million tonnes, representing about 60 per cent of ECL’s existing capacity of 0.85 million tonnes. The project will be predominantly funded through internal accruals, highlighting the company’s robust cash flow.

In addition to the new plant, ECL is expanding its Srikalahasthi Works in Andhra Pradesh by 150,000 tonnes at a cost of ₹64 crore. This expansion is expected to be completed within a year, boosting ECL’s combined capacity to 1 million tonnes.

ECL’s strategic expansion aims to leverage the Indian government’s Jal Jeevan Mission programme, which has an outlay of ₹3.6 lakh crore, creating a substantial demand for DI pipes. The company’s strong financial performance underpins this growth strategy. In Q4FY24, ECL recorded a 6.8 per cent rise in total income to ₹2,039 crore from ₹908 crore, and a profit after tax surge of 114 per cent to ₹227 crore from ₹89 crore. EBITDA also rose by 50.9 per cent to ₹346 crore.

For the full fiscal year, ECL’s total income grew by 3 per cent to ₹7,580 crore from ₹360 crore, while profit after tax increased by 134.1 per cent to ₹740 crore from ₹316 crore, indicating substantial margin expansion.

The Kejriwal family’s commitment to funding new capex through internal resources reflects strong cash flow generation from existing operations. This strategic approach is a significant departure from the past, where a debt-fueled steel plant venture in Bokaro, Jharkhand, faced execution challenges and eventual insolvency during a commodity downturn. The plant was later acquired by Vedanta Ltd in 2019.

Electrosteel Castings’ bold expansion plans and solid financial performance underscore its leadership in the ductile iron pipe industry and its strategic positioning for future growth.

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