Electrosteel Castings - Proud Sons of West Bengal
Electrosteel Casting continued to grow and excel in West Bengal despite several odds. M K Jalan, Director, shares with Core Sector Communiqué the company’s milestones, challenges and roadmap
Q1. It has been a long journey – from foraying into ductile pipe manufacture at a time when both the technology and the product was untested to becoming one of the top five global players in the field. Kindly recount the important milestones Electrosteel has achieved over the years.
Jalan: It has really been a long journey… When I look back, I am honestly a bit overwhelmed by how far we have come since we started. It may not be possible to list all the achievements till date simply because of the paucity of space, so I will try to highlight only the major ones.
1990s was a happening decade for us. In 1994, we set up 60000 TPA Ductile Iron Pipe Plant at Khardah near Kolkata, the first ever in India Netherlands
There was absolutely no looking back thereafter. Circa 2000, we increased our capacity to 120,000 TPA for Dl pipes. The Company obtained Kitemark license from BSI , UK West Bengal . Two years later, we raised USD 40 Million through the issue of Global Depository Receipts (GDRs) in October 2005 and become the first Indian Company to be listed on Professional Securities Market (PSM) of the London Stock Exchange (LSE) in addition to being the first Company to issue GDRs on the PSM. The Company was accorded Three Star Export House by the JDGFT, Ministry of Commerce and Industry of the Government of India.
Year 2006 was very eventful. The Company increased its Dl pipe manufacturing capacity from 2,00,000 TPA to 2,50,000 TPA and commissioned Coke Oven Plant at Haldia. The Company commissioned 12 MW Power Plant & 30,000 TPA second Kiln Sponge Iron Plant at Haldia. Mini Blast Furnace capacity increased from 2,00,000 TPA to 2,35,000 TPA. The Company successfully commissioned Pulverized Coal Injection System in Blast Furnace and Stamp. Charging System in Coke Oven Plant at Haldia enhanced operational efficiency. We have been allotted an Iron ore mine at Kodolibad, Jharkhand and a non coking coal mine in joint venture at North Dhadu . In 2007, we implemented SAP ERP system hosted in state of the art Data center connecting all manufacturing plants and sales offices across Indian Geography supporting 350 user base to enable supply chain of the Company. Next year, in 2008, the company Tied up US$ 77.50 mn through ECB, commissioned a State of the Art sinter plant at Khardah and commissioned a 75,000 TPA coke oven battery at Haldia. Two years ago, we commissioned fourth coke oven battery reaching a total capacity of 290,000 TPA of coke and taking the total capacity of DI Pipes to 280,000 TPA.
What have been the advantages and disadvantages of working out of West Bengal ? How did Electrosteel thrive despite all odds, at a time when entire economy of the state transformed into a quagmire of lost hope?
Jalan: Working out of West Bengal has been a huge advantage. For one, the quality of labour that we have here is amongst the best in the world. It is this workmanship that has helped us not only retains our quality edge, but to constantly keep us at the very forefront of technological advancement. The ability of our workers to absorb now technologies and sometime to even improve them further has to be seen to be believed. And I want to take the opportunity of removing the myth that workers in Bengal do not have work culture – on the contrary I feel that they are absolutely top class both in terms of skillfulness and productivity. Some credit of this has to be given to the outgoing Govt.
Yes, we too have had our share of disappointment in the state. We were denied land that we required for expansion – industrial land in our backyard which was converted for housing. Similarly when we were threatened with stoppage of raw materials and were virtually forced to go and locate ourselves in raw material bearing states outside West Bengal the state did precious little to help us. Neither did the state pay heed to our pleas for the allotment of a coal block which would have helped us set up a thermal power plant. But overall, we are a proud son of the soil industry of West Bengal – we have continued to grow and excel despite all the odds and feel that the resolve of the new government to provide a focused administration that understands the need of the industry will help the state.
What are your expectations from the new government? What can and should be done to make West Bengal regain its position of industrial preeminence?
Jalan: The Government and the Industry has to work in tandem for the growth and welfare of the State. In terms of resources from geographical location to inventive population to legacy of craftsmanship – West Bengal has everything going for itself. With a new government at the helm people are bullish about the state.
What has been the reason behind Electrosteel’s phenomenal success as an exporter? How do you continue to compete against global giants especially in the critical West European markets?
Jalan: It has been our firm belief that consistent quality is what sets one apart in any crowd. It is one thing to make few good pipes on a sample scale and get the required certification. It is another thing to produce a consistent quality on a continuous regular basis. It takes a long period of experience to achieve this and establish our credentials on the strength of proven performance of laid pipelines. Cost and quality conscious customers do not look only at the direct cost of the pipe. For them, it is the total life cycle maintenance and the operating cost of the water supply system which matters. We have been building to gain confidence and highly cost and quality conscious customers in most advanced and developed countries like UK , France , Spain , Singapore , Hong Kong, Abu Dhabi
Mind you, “quality” or “technological excellence” are not things that can be bought off the shelf. It takes long years of back breaking, often frustrating work to achieve them. We can literally claim that quality is our middle name – something that has given us not only the pioneering status in the industry but has also helped us retain our leadership position for so long.
From being a pioneer with virtually no competition to a market that is increasingly becoming fragmented, where do you see yourself in the years ahead? What one thing will you stress on to maintain your leadership status?
Jalan: Healthy competition is always welcome. For one, competition do not let one become complacent and the desire to emerge winners make all parties give that “extra bit” which is good for the overall development and growth of the industry itself. In our case, after we have proved year after year and in every market across the world the superiority of our products, which has led to their acceptance, we are not afraid of competing as we have competed with best of the world and are still around! Since the beginning we have been projecting the better qualities of DI Pipe compared to the substandard competing products. We were also pioneers in providing technical expertise to the customers in actual helping them in designing the schemes, formulating the specification which would suit his particular site requirement and then in after sales services in installation actual delivery of water to the complete satisfaction of the customers. Besides, I do not subscribe to your view that the market is getting fragmented. On the contrary, it is growing and there are some compelling fundamental reasons for that. Besides, having new manufacturers come in does not necessarily mean more competition. From setting up a plant, to attaining critical mass, to the attainment of a position to challenge the leader, is not a cycle that can be completed in a day.
After we want to have world class infrastructure we will also need world class procurement policies which can reward and differentiate quality producers and also encourage healthy competition to encourage new entrants to grow without compromising on the quality standards.
What are your plans for the future? Where do you see yourself in the year 2020? And beyond?
Jalan: We are setting up a 2.2-million ton per annum capacity of integrated steel plant in Jharkhand, which will also produce 300,000 tons of DI pipe. This additional capacity will help us to increase our share in the global market. We are looking for suitable industrial land near Khardah to expand and diversify for manufacturing high value added DI pipes required for world class infrastructure.
How sustainable is your business? What have been your CSR efforts?
Jalan: Steel by its very nature is eco friendly – its long life span and it being recyclable makes it not only nature friendly but also sustainable. By this measure itself we are a sustainable entity. Our carbon footprint too is competitively smaller. Like all pioneers, we have been conscious about the environment long before it became fashionable and are constantly taking steps to ensure that we give back to mother earth more than we take from her.
As far as CSR efforts go, we are an equal opportunity employer and view ourselves as a socially responsible corporate citizen. To us, CSR is no mere term to which it is obligatory to pay lip service in Corporate Communication efforts – to us CSR is something we embrace as part of our daily life and it is against our principles to talk about our CSR efforts, least we trivialise the focus and get tempted to pat our backs for what we do, in normal course of things, for the society from which we come, the society that nurtures us.
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