Electrosteel Castings : Making Water Move

Electrosteel Castings: Making Water Move
BSE 500128; CMP Rs 54

The biggest spun pipe manufacturer in the country-Electrosteel Castings is entering a new era of exciting growth, which will propel the corporate into the big league of Integrated Steel producers like Tata Steel and Jindals.

For nearly 5 decades Electrosteel has made a name for itself in manufacturing Steel Spun pipes which are used for Civilian Water works across the country. Infact, the Electrosteel name is synonymous with the phrase "Making Water Move".

Some of the biggest water supply pipelines in the arid regions of Andhra Pradesh, Tamil Nadu and Karnataka have Electrosteel's spun pipes as the backbone. The corporate has also established its manufacturing footprint in parts of Asia and Europe, to serve local markets and meeting out the threat of import sanctions on third world imports.

The successful business strategy deployed by Electrosteel Castings is handed out as standard course material to budding management students at the HarvardBusinessSchool.

The financials speak for themselves. The corporate recorded a 18 per cent jump in Revenues at Rs 1123 crore in FY07, with after tax profits of Rs 106 crore (Rs 76 crore), a jump of 40 per cent.

FY07 EPS was placed at Rs 5 per share (Rs 3.7 per share), and Electrosteel paid out a record dividend of Rs 12.5 per share.

The promoter interest is close to 53 per cent and the FII/FI/MF holding is another 20 per cent. Leaving a small float with the public.

Electrosteel is now ready for its second leg of expansion worth Rs 10000 crore, which will be invested over the next 36 months.

This will include a 1 million tonne integrated steel plant with dedicated iron ore and coal mines to be set up under a new entity by the name of Electrosteel Integrated.

Electrosteel Castings will be investing Rs 500 crore as Equity into the project, with the promoters providing as much as Rs 100 crore by taking a preferential allotment of 20 lakh shares as per the Sebi pricing formula for preferential offers.