Water for all makes this company revenues bloom

Electrosteel Castings Limited

Know the Company

Electrosteel Castings Limited (ECL), established in 1955 in Kolkata is a pioneer in the manufacturing of ductile iron (DI) and cast iron (CI) pipes in the country. Today, the company is India’s largest pipeline solutions provider, manufacturing ductile iron pipes, DI fittings, and cast-iron pipes, with an installed capacity of 680,000 metric tonnes per annum (MTPA). 

ECL has built a strong reputation for its high-quality products, catering primarily to the requirement of water infrastructure, sanitation, and industrial sectors. Over the past six decades, the company has grown into one of the largest manufacturers of DI and CI pipes in the world, playing a pivotal role in various critical infrastructure projects.

ECL has presence spanning 5 continents and over 110 countries across the globe, serves them through subsidiaries in Europe, North and South America, Southeast Asia, the Middle East, and Africa. Its major clients include Govt of India, state governments, ISRO, Boeing Corp, Doha Metro, Vikram Sarabhai Space Centre, Hamad International Airport, Kargil, BMW, Ras Abu Aboud Stadium in Qatar, and the French Atomic Centre, etc.

Manufacturing Facilities

Khardah plant: It is one of the main two units situated at Khardah near Kolkata, where Electrosteel’s Ductile Iron Pipes are manufactured. It has facilities for producing 2.80 Lakh TPA of DI pipe, right from producing the base metal in Blast Furnace to pipe casting and finishing. It also has facilities for producing DI fittings 10,200 TPA and Flange Pipes.

Srikalahasthi Works: ECL has a manufacturing facility in Srikalahasthi Mandal, Tirupati District of Andhra Pradesh, India. The integrated facility is spread across 242 acres of land. At this plant, ECL has installed a 4,00,000 TPA DI Pipe Plant, integrated with the 5,25,000 TPA Mini Blast Furnace, 2,80,000 TPA Coke Oven Plant, 22 MW Waste Heat Recovery captive Power Plant, 2,00,000 TPA Cement Plant, 16,000 TPA Ferro Silicon Plant and 5 MLD Municipal Sewage Water Recycling Plant. 

Haldia plant: This facility is located in the Industrial town of Haldia in West Bengal. It has a 3,24,000 TPA Coke Oven Plant and 2 X 100 TPD Sponge Iron unit. Here, the Company also have a DI fittings and Accessories plant of 10,800 TPA and one 9 MVA Ferro-Alloy producing unit.

Bansberia Works: It is located at Bansberia near Kolkata, spread over 22 acres of land, which is the Company’s ultra-modern DI Pipe coating and finishing plant. Its wide range of linings and coatings capable the Company to produce premium quality bespoke pipes to suit the unique needs of each of its customers. This unit exclusively caters to the Company’s export clientele.

Elavur manufacturing facility: This plant is located near Chennai in Tamil Nadu, where ECL has a 36,000 TPA Cast Iron Spun Pipe manufacturing facility. It is renowned as the biggest Cast Iron Pipe manufacturing facility in India.

Strengths

ECL is the first company to introduce DI pipe products in the Indian market in 1994. Presently, the Company has a strong market positioning in the domestic market with a 20% market share in the domestic DI pipe industry in terms of volume. The Company also controls almost 60% of the export market. over the years, ECL has been creating industry benchmarks by delivering internationally accredited superior quality Ductile Iron Pipes and Fittings.  Since its inception, the company has been staying in the market leadership position in DI piped industry on product quality and steady expansions in capacities. It also enjoys a strong brand reputation, which helps to get repeat orders from existing customers and addition of new customers. 

The company offers a complete product portfolio, including DI pipes, DI fittings, CI pipes, and specialized pipe solutions for water supply and sewage systems. The company’s cutting-edge production facilities are equipped with advanced technology, ensuring high standards in both quality and environmental sustainability. 

Quality and Approvals 

ECL’s products are known for their durability, corrosion resistance, and ability to withstand high pressure, making them ideal for large-scale water and waste management systems. The company is committed to achieving ‘Quality Right the First Time.’ Its products have been certified by globally renowned and respected certifying bodies such as BSI (UK), DVGW (Germany), UL (USA), FM (USA), BV (Italy), OVGW (Austria), IGH (Croatia), and SASO (Saudi Arabia), among others. 

Over the years, the company has maintained its quality management system in accordance with ISO 9001, its Environmental Management System under ISO 14001, its Energy Management System as per ISO 50001, and its Occupational Health and Safety standards in line with ISO 45001. It also complies with Social Accountability requirements as per SA 8000, recognized by various renowned auditing organizations worldwide. Recently, auditors from BSI (UK), UL (USA), FM (USA), MPA NRW (Germany), and OFI (Austria) audited ECL’s plants, and the company successfully passed all the audits.

Opportunities 

The Government of India has launched several key initiatives to position the country as a global manufacturing hub, including the Make in India initiative, such as the Production Linked Incentive (PLI) Scheme, the Defence Production Policy, the National Policy on Electronics (NPE), Skill India, and Atmanirbhar Bharat Abhiyan. Additionally, significant investments in Special Economic Zones (SEZs) and the National Infrastructure Pipeline are expected to drive growth in the industrial sector. As India’s market leader in DI pipes, ECL is well-positioned to benefit from the government’s focus on water projects like the Jal Jeevan Mission and AMRUT 2.0.

On the international front, strong demand for DI pipes in major infrastructure projects offers a significant growth opportunity for the company. Domestically, the government’s emphasis on water supply and sanitation schemes across rural India, under initiatives such as the Jal Jeevan Mission, Swachh Bharat, and AMRUT for urban water supply, continues to drive demand for pipes. As India faces water scarcity, a substantial portion of its agricultural land remains uncovered by irrigation networks. Meanwhile, ECL’s export division is actively exploring new markets, further expanding its global footprint as the largest exporter of DI pipes and fittings from India.

Strong Financials

ECL reported a consolidated net profit increase of 202% in the first quarter of the current financial year to Rs 226 crore over the same quarter of previous financial year.  At the same period revenue rose 19% to Rs 2012 crore as against Rs 1685 crore during the previous year quarter. 

Capital Expenditure

The company is consistently enhancing its capacities and adopting advanced technologies across its product range. It is currently expanding its DI pipe capacity by 220,000 tonnes through a brownfield expansion, with an investment of Rs 650 crore. Furthermore, an additional Rs 600 crore has been allocated for working capital requirements.

Demand Drivers for DI Pipes

The Government of India’s initiatives, such as the Har Ghar Nal Se Jal programme, Swachh Bharat Mission, and Namami Gange, aim to provide 100% of the population with access to drinking water and sanitation, supported by substantial funding. State governments are also expected to contribute significantly to these efforts. In urban areas, schemes like AMRUT 2.0 and Smart City projects are projected to sustain the growing demand for DI pipes and fittings. Currently, only about 36% of India’s agricultural land is irrigated. The transition from canal-based to pipeline-based irrigation systems is fostering a promising sector, further driving demand for DI pipes. 

DI pipes and fittings are increasingly favored for transporting bulk industrial water due to their superior sturdiness and durability. Wastewater recycling and reuse are also gaining momentum in India, particularly in water-scarce regions. With rapid industrialization, both water and wastewater transportation are emerging as high-priority sectors for the future.

Bright Industry Outlook

India is experiencing significant economic progress, heavily investing in infrastructure to achieve its goal of becoming a $5 trillion economy and the third-largest economy globally. With 16% of the world’s population but only 2.5% of its land and less than 4% of its water resources, rapid urbanization has expanded water and sewage networks. Despite past government spending, rural India still lacks adequate piped water and sewerage coverage. In response, the Government of India launched the ‘Jal Jeevan Mission’ to provide piped water to all rural households and the AMRUT mission to improve urban water supply and sewage disposal. 

As economic development fuels industrialization, sectors like steel, data centers, EV battery production, and power plants are significant water consumers. The government has mandated increased use of recycled wastewater in industry. Additionally, growth in the real estate and service sectors drives demand for industrial water. These factors are strong demand drivers for DI pipes, positioning ECL as a major beneficiary.

Concerns

The Government of India has been spending a large amount over the past couple of years on various schemes, including the ‘Jal Jeevan Mission’, the AMRUT 2.0 initiative, and the ‘Swachh Bharat Mission’, which have already contributed to significant growth in the water and wastewater sectors. However, sustained funding from the government will be required in the coming years to continue driving demand for pipes and fittings and to ensure further progress in these schemes. 

Large-scale capacity additions in the domestic market could potentially disrupt the demand-supply scenario and may also squeeze margins for the pipes industry. The export market, particularly in European countries, is also facing challenges due to the imposition of anti-dumping and anti-subsidy duties on Indian DI pipes by the European Union. 

The threat from substitutes is another concern, as the introduction of low-cost plastic pipes in low-pressure gravity distribution networks could impact the demand for DI pipes in that sector.

Sector: Industrials

Market Price: Rs. 211.00 as on today

FV: Rs 1/-

Stock Name: Electrosteel Castings Ltd

BSE Code: 500128, NSE Code: ELECTCAST

Market Cap.: ₹13330 Crore

Book Value: Rs. 82.7

Segment: DI Pipes and fittings

Incorporation: 1955

Headquarters: Kolkata, India