Electrosteel Castings, one of India’s leading producers of ductile iron pipes, has decided to set up a new DI pipe and fittings plant in Odisha, with an eye on large scale expansion and future diversification.
The board, which met on Monday, to finalise the fourth quarter and FY24 results, approved a proposal to set up the plant and acquire a 500-acre plot in Odisha for this purpose, signalling the intent of the promoter Kejriwal family to take up large capex again.
“We are working out the capacity of the new plant and investment required in this. It should be ready in a couple of months,” an official of the company said in the evening.
The capacity of the greenfield plant can be as much as 0.5 million tonnes, which is equivalent to about 60 per cent of ECL’s existing capacity of 0.85 mt. The company is likely to fund the project mostly from internal accruals.
While the new project is on the drawing board, the company is expanding the capacity of Srikalahasthi Works in Andhra Pradesh by 150,000 tonnes with ₹64 crore.
The additional capacity will be coming on stream in about a year and take ECL’s combined capacity to 1 mt.
DI pipe makers such as ECL are hoping to cash in on the Centre’s focus on Jal Jeevan Mission programme, which has an outlay of ₹3.6 lakh crore.
The management’s keenness to harness internal accrual for new capex underscores the strong cash flow generation from the existing business. In the past, the Kejriwal family promoted a steel plant, fuelled by debt, which ran into execution trouble and finally landed up in insolvency with the downturn of the commodity cycle. The Bokaro, Jharkhand-based plant was later acquired by Vedanta Ltd in 2019.
PAT up 114%
ECL recorded a 6.8 per cent rise in total income to ₹2,039 crore in Q4FY24 against ₹908 crore even as profit after tax rose 114 per cent to ₹227 crore from ₹89 crore. In the same period, EBIDTA rose 50.9 per cent to ₹346 crore.
For the full year, total income inched up 3 per cent to ₹7,580 crore from ₹360 crore, while PAT grew 134.1 per cent to ₹740 crore from ₹316 crore, signalling margin expansion.
