ECL consolidates to become largest DI pipe maker

The merger of Electrosteel Castings Ltd (ECL) with south-based group Srikalahasthi Pipes Ltd will make the combined entity a leading manufacturer of ductile iron (DI) pipes with 30 per cent market share, the ECL said on Monday.

The merger of Electrosteel Castings Ltd (ECL) with south-based group Srikalahasthi Pipes Ltd will make the combined entity a leading manufacturer of ductile iron (DI) pipes with a 30 percent market share, the ECL said on Monday. The respective boards of both the companies have approved the amalgamation scheme effective from October 1.

The merged entity will have a total DI pipe manufacturing capacity of 8 lakh tonne in the country after the ongoing expansion gets completed in the next 18 months at Srikalahasthi Pipes Ltd, the company said. "The merger will achieve the group objective of consolidating its DI pipe manufacturing business into a simplified structure with a single entity thereby creating a platform that will help in pursuing aggressive growth going forward domestically as well as internationally.

"This will help us raise cheaper debt and reduce cost," ECL ED (Group Finance) and CFO Ashutosh Agarwal told PTI. Srikalahasti shareholders will receive 59 equity shares of ECL for every 10 equity shares held in SPL.

Srikalahasthi Pipes Ltd, promoted by the diversified Lanco Group, was taken over by the Kolkata-based ECL group in 2001. After the acquisition, the new management significantly expanded capacity for pig iron and metallurgical coke and also diversified into several new products. The merger will be subject to regulatory approvals, including approval from the shareholders, creditors, SEBI, and the stock exchanges where equity shares of the company are listed.

Both the company boards considered and approved plans to reorganize the businesses with a view to simplify the group structure and consolidate. Electrosteel Castings Ltd closed last fiscal with revenues of about Rs 2,500 crore while Srikalahasthi Pipes Ltd had revenues of nearly Rs 1,700 crore.

Electrosteel Castings is India's premier manufacturer and exporter of DI pipes and fittings having its facilities in Khardah, Haldia, and Bansberia in West Bengal and Elavur in Tamil Nadu.