BFM BUSINESS TV, Paris Interview with Cyrile Hahang, Electrosteel France

?1-????How can Electrosteel, although little known to the general public, be linked to an everyday consumer product, and how is it useful to the general public?

Electrosteel is an industrial group that manufactures ductile cast iron pipes, i.e. cast iron that is not brittle. We're familiar with grey cast iron, but not so much with ductile cast iron. Ductile cast iron has the same corrosion resistance and durability properties as grey cast iron, but is not brittle.

So Electrosteel is a manufacturer of pipes and fittings (because we also produce all the fittings that go with the pipes, i.e. we make the whole network in ductile cast iron).

So why aren't we known to the general public?

A/ Because our products are buried underground and they perform well when you don't hear about them!

Let me explain: France has the largest network of drinking water pipes in Europe. Did you know that? Probably not, but the facts and the performance are there.

According to the Statista institute, you have :

- 906,000 km of pipes in France for 68 million inhabitants.

- You have 544,000 km of pipes in Germany for 83 million inhabitants.

- There are 474,000 km of pipes in Italy, with a population of 59 million.

This means that even the smallest villages benefit from a collective drinking water and wastewater network.

It's the same in the centre of France, in the north, in the south in the big cities, and as I was saying in the smallest villages, even in the mountains.

It's a very high level of hygiene and health for everyone: having drinking water on tap, and not having to buy bottled water for your daily consumption, as is the case in some countries. Of course you can buy bottled water, but it's a personal choice and perhaps even a luxury, but it's not necessary.

In fact, it's becoming commonplace, especially as the service and drinking water are distributed 365 days a year, 24 hours a day.

Finally, we are not known to the general public, because a private individual is not going to buy 1 km or 300 ml of 8 cm or even 1.20 m diameter pipe for his own personal consumption.

In fact, Electrosteel sells pipes to water syndicates, public service delegations such as Suez/Veolia/Saur, etc., and to farmers' associations.

For example, the Bas-Rhin water and sewerage authority has 737 municipalities and over a million inhabitants: we sell them our ductile cast iron pipes and fittings.

On the other hand, the public - and each and every one of us - knows the price of the water they pay and, in the end, this strategic service is not expensive - we have to admit that - and that's an exceptional performance in France. To put it very simply, we pay €5 per cubic metre, with a breakdown of €2.50 for drinking water and €2.50 for wastewater treatment (January 2022, source: SISPEA).

To be very clear, this means that we pay €2.50 per cubic metre for drinking water, which is exceptional for a strategic product, and that's why we need pipes that are also exceptional in terms of their duration over time and the quality of the water they maintain when transported over thousands of kilometres.

In short, it is therefore public investment decisions that shape our daily lives, or private decisions made through public service delegations, but unlike the public/private buildings we see, the motorways we drive on, in fact these pipes, our ductile cast iron pipes, these networks are the underground networks that we don't see... And that carry drinking water to our taps.

2- Faced with the problem of drinking water, how does Electrosteel manage to adapt to international standards in each country?

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Electrosteel is an international group and today we are celebrating 25 years of strategic partnership between France and India.Electrosteel has been in France for 23 years and we also have factories in India: so we're used to international standards. But how do we adapt to each country?First of all, we have to realise that drinking water is vital, and that ductile cast iron pipes ensure that the quality of the water they carry is maintained:

- over hundreds of kilometres ;

- and over time. If, for example, drinking water is stored for a day, 2 days or even longer.

To guarantee this, there are French, European and international standards: the NF standard, the EN standard, the Japanese JIS standard, etc., and finally the ISO standard.So how do we go about it?

Remember that the quality of drinking water is a sovereign criterion, so each country has its own criteria (or it can also accept the criteria of similar countries). In practice: France has the Ministry of Health's sanitary conformity attestation, Belgium has the Belgaqua organisation, Germany has its Hygiene Institute, Austria has the OFI, and so on.

It is therefore necessary to send samples of the pipe with the internal/external coatings so that they can be analysed, and only then is a certificate of conformity issued.

But if, for example, there is no compatibility between two countries, different stocks will have to be built up and kept. For example, for the sealing rings (which are between each pipe to make the seal), there is a stock for France and southern Europe, and there is a stock for Germany and the German-speaking countries, which have slightly different criteria.

So we have to have certifications and attestations of conformity for each of these countries.As France is a leader in terms of standardisation, with high, even very high, drinking water criteria, often exceeding those of the World Health Organisation, we can use the French health conformity attestations to export to other countries. And being in France means that we can export and make our mark on the world stage, because international invitations to tender accept French drinking water standards.

2-???Is there any difference between the most developed and less developed countries when it comes to using Electrosteel products?

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No, and this is the strength of Electrosteel France, Electrosteel Europe and Electrosteel worldwide, as all products comply with strict standards that are applicable in all countries.

No, there is no such thing as superior quality or inferior quality: this is also the strength of ductile iron pipes and fittings, which offer a guaranteed lifespan of 100-140 years.

This guaranteed lifespan is not a projection based on predefined criteria, as if we could know and fix an uncertain future "all other things being equal". It is an observation. The City of Paris' water network is mainly made up of ductile cast iron pipes, many of which are over 70 years old, and which are still in service, providing high-quality water.

So how do we manage to have quality products that are ultimately affordable for developed countries and sometimes less developed countries?It's through healthy competition between manufacturers who meet the same demanding production and performance criteria. There is no cronyism: all purchases are made by invitation to tender with multiple criteria.The price criterion sometimes accounts for only 50% of the overall score. There are also delivery times, which can account for up to 10% or more of the purchasing decision, technical assistance with installation and, of course, commitments to corporate social responsibility and decarbonisation.

Finally, we need to take account of supply chains, because we need to guarantee the same quality of product from the factory to your customer, who may be a small village on a mountain in the Alps, or a narrow street in the middle of a city with heavy traffic, and we need to find places where the pipes can be stored properly and where they can withstand multiple handling.In this respect, Electrosteel is a pioneer in transporting ductile iron pipes in containers. Our pipes are 5.80 m long and fit perfectly into 20' or 40' containers, so they arrive in perfect condition - just like they left the factory.

To decarbonise this transport, we decided to use motorised barges between the port of Fos sur mer and the river port of Arles. This is a first, and we have taken 6,000 lorries off the roads.This is not just for imports, but also for exports, since we exported around 250 containers from Fos sur mer this year.

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3- Is there any difference between the most developed and less developed countries when it comes to using Electrosteel products?

No, and this is the strength of Electrosteel France, Electrosteel Europe and Electrosteel worldwide, as all products comply with strict standards that are applicable in all countries.

No, there is no such thing as superior quality or inferior quality: this is also the strength of ductile iron pipes and fittings, which offer a guaranteed lifespan of 100-140 years.

This guaranteed lifespan is not a projection based on predefined criteria, as if we could know and fix an uncertain future "all other things being equal". It is an observation. The City of Paris' water network is mainly made up of ductile cast iron pipes, many of which are over 70 years old, and which are still in service, providing high-quality water.

So how do we manage to have quality products that are ultimately affordable for developed countries and sometimes less developed countries? It's through healthy competition between manufacturers who meet the same demanding production and performance criteria. There is no cronyism: all purchases are made by invitation to tender with multiple criteria. The price criterion sometimes accounts for only 50% of the overall score. There are also delivery times, which can account for up to 10% or more of the purchasing decision, technical assistance with installation and, of course, commitments to corporate social responsibility and decarbonisation.

Finally, we need to take account of supply chains, because we need to guarantee the same quality of product from the factory to your customer, who may be a small village on a mountain in the Alps, or a narrow street in the middle of a city with heavy traffic, and we need to find places where the pipes can be stored properly and where they can withstand multiple handling.

In this respect, Electrosteel is a pioneer in transporting ductile iron pipes in containers. Our pipes are 5.80 m long and fit perfectly into 20' or 40' containers, so they arrive in perfect condition - just like they left the factory.

To decarbonise this transport, we decided to use motorised barges between the port of Fos sur mer and the river port of Arles. This is a first, and we have taken 6,000 lorries off the roads.

This is not just for imports, but also for exports, since we exported around 250 containers from Fos-sur-Mer this year.

4- Few Indian companies have chosen to set up in France. Why was Electrosteel a pioneer in this decision?

It's important to remember that in our field, we have to have a strategic vision, because we're not in it for the hype. As I said, we work on products that provide drinking water for all of us and last 100-140 years. In fact, you really can't go wrong when you choose a country.

So why did we choose France and why has it been a success?

First of all, I'd say that France and India share a number of similarities.

These are trite facts, but it's worth pointing them out. In France, we have a democracy and people can express their point of view in many ways: it's the same in India, we have a democracy and people can express their point of view. This can give a feeling of slow decision-making, sometimes even confusion, but in fact a strong and resilient country. From a financial point of view, I'd say that corporate tax rates are similar: in India there was a 33% tax rate, which has now dropped to 25%, and it's the same in France.

But there are also differences that make the opportunities interesting and rich:

In France, the water management model is particularly effective, with communities of communes, with syndicates, with farmers' associations, with régie des eaux, with délégation de service public. In short, there are a multitude of players in France that don't exist elsewhere. So being in France means that we can work effectively with all types of customer.

What's more, we work in France on spot contracts, of course - with projects to be completed in six months - but we also have multi-year framework contracts lasting 2-3-5 years, and public service delegation contracts sometimes lasting 25 years. It's a wealth of contracts that are extremely formative for international performance from France.

Finally, the French language is used in many countries in West Africa and is the basis for drafting contracts. Similarly, Electrosteel's English in India is a preferred means of drafting contracts all over the world. By being in France, and also being in India, there is this exchange and reinforcement of this strength to deal at an international and global level.

5- How is innovation at the heart of Electrosteel's strategy to improve or even avoid maintenance in some cases, while being more respectful of the environment?

Once again, I come to the choice of France for innovative products, because in France we're ahead of the game when it comes to patent protection, and we're also ahead of the game when it comes to flexibility when it comes to granting patents. This is not yet the case in India, which is why we develop our products worldwide from France and Europe, and we sometimes decide to produce certain items only in Europe for the rest of the world, just as we also have production in India for the rest of the world with standardised products.

In terms of production processes, I should mention our project, which is the winner of France's recovery plan and is called F2TDE, which stands for 'Fonderie fran?aise de tuyaux des carbonées'.

Previously, it was unthinkable to imagine investments - CAPEX - that could be competitive with old production models. To put it simply, electric furnaces that can rival and compete with blast furnaces. It's possible today, and it's possible in Europe, and it's possible in France. Elsewhere - where there is an abundance of raw materials - blast furnaces are still used. But overall, decarbonisation is underway and France is a prime destination for it.

Finally, in terms of operating costs, or OPEX as they are known, it was impossible to imagine that the quality of scrap metal could one day be better than the quality of virgin ore. However, this is the case, because inputs are better controlled, with precise classification at French and European level. This means that we can have scrap metal that replaces the ore, and so - if we have no more ore in France - we have scrap metal, and that's what we can use today to replace the ore. This is possible in France which currently exports its scrap metal to Turkey and China, except that this scrap metal - unfortunately - is no longer coming back to Europe, so it's time to recycle this scrap metal and transform it in Europe and decarbonise the production process. That's the choice we've made, even though the economic situation has been turned upside down and the price of scrap metal has risen from €100 per ton to over €500 per tonne. But now we're back to more affordable prices.

In terms of the operation of this type of plant, which is very energy-intensive, France's strength lies in the fact that it has competitive, decarbonised electricity thanks to its nuclear power stations. It's not perfect energy, but it's decarbonised energy that allows us to compete with the best energy costs in the world. Thanks to the ARHEN contract, we have a price of around €45 per kilowatt: that's great, and this type of contract needs to be renewed because it expires in 2025... We need to renew them for 25-50 years to give visibility for our industrial investments.

Finally, what is sometimes seen as a weak point, i.e. the salaries we have in France, which are sometimes higher than those in Europe and many other countries around the world, becomes an asset if we know how to use the best automated production processes, which becomes compulsory and allows us to call efficient personnel.