Investor Presentation - Welspun
Investor Presentation - Welspun Investor Presentation - Welspun
Welspun Group | Welspun Corp Ltd Investor Presentation November 2012
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<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
<strong>Investor</strong> <strong>Presentation</strong><br />
November 2012
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
On The Path of Global Leadership…<br />
WELSPUN CITY, ANJAR
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
Disclaimer<br />
Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking<br />
statements,” including those relating to general business plans and strategy of <strong>Welspun</strong> Corp. Limited (“WCL"), its future outlook and<br />
growth prospects, and future developments in its businesses and its competitive and regulatory environment. Actual results may differ<br />
materially from these forward-looking statements due to a number of factors, inter alia including future changes or developments in<br />
WCL's business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological<br />
changes and political, economic, regulatory and social conditions in India. This presentation does not constitute a prospectus, offering<br />
circular or offering memorandum or an offer invitation, or a solicitation of any offer, to purchase or sell, any securities of WCL and<br />
should not be considered or construed in any manner whatsoever as a recommendation that any person should subscribe for or<br />
purchase any of WCL's securities. Neither this presentation nor any other documentation or information (or any part thereof) delivered<br />
or supplied under or in relation thereto shall be deemed to constitute an offer of or an invitation by or on behalf of WCL to subscribe<br />
for or purchase any of its securities.<br />
WCL, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with<br />
respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information<br />
contained in this presentation, unless otherwise specified is only current as of the date of this presentation. WCL assumes no<br />
responsibility to publicly amend, modify or revise any forward looking statements contained herein, on the basis of any subsequent<br />
development, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is<br />
based on management information and estimates. The information contained herein is subject to change without notice and past<br />
performance is not indicative of future results. WCL may alter, modify or otherwise change in any manner the content of this<br />
presentation, without obligation to notify any person of such revision or changes. This presentation may not be copied and<br />
disseminated in any manner.<br />
THE INFORMATION PRESENTED HERE IS NOT AN OFFER INVITATION OR SOLICITATION OF ANY OFFER TO PURCHASE OR SELL ANY<br />
SHARES OR ANY OTHER SECURITY OF WCL.<br />
This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.<br />
These materials are not an offer or solicitation of any offer of securities for purchase or sale in or into the United States, Canada or<br />
Japan.
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
<strong>Welspun</strong> Group<br />
Brief Synopsis<br />
• One of the fastest emerging global groups, with multi-country<br />
strategy and manufacturing facilities across geographies<br />
• Group companies enjoy market leadership positions:<br />
• 2 nd ranked Large Diameter Pipe Company in World -<br />
Financial Times, UK<br />
• 2 nd ranked in Home Textiles – FTT<br />
Global Recognitions<br />
<strong>Welspun</strong> India “Golden Peacock Eco-Innovation Award for the year 2012<br />
for Eco Dry Towels”<br />
<strong>Welspun</strong> Group “ Green IT Award for 2011”<br />
- by CIO magazine, IDG Group 2011<br />
<strong>Welspun</strong> Group<br />
Ramakrishna Bajaj National Quality Merit Award for<br />
<strong>Welspun</strong> Vidya Mandir – IMC 2012<br />
• Relationship with marquee clients; Fortune 100 companies<br />
like Exxon Mobil, Chevron, Shell, Bechtel, WalMart, Target etc<br />
• Equity investment by renowned investors like Apollo, ICICI<br />
Life, IDBI Bank, Reliance Capital, 3i (UK), Genesis (UK)<br />
• Excellent relationship with domestic and international lenders<br />
Key Markets<br />
• Major exports mainly to North America, South America<br />
Europe, Middle East, South East Asia, Africa, etc.<br />
<strong>Welspun</strong> Corp Best India Manufacturing Company in the US – IACC 2011<br />
Top Exporter for the Year 2010-2011 - EEPC<br />
<strong>Welspun</strong> Corp Economic Times “Emerging Company of the Year Award”<br />
for Corporate Excellence - 2008<br />
<strong>Welspun</strong> Corp<br />
2nd Largest (Large Diameter) Line Pipe Manufacturer<br />
in the World - Financial Times UK - 2008<br />
<strong>Welspun</strong> India “ Outstanding CSR in Textiles Sector”<br />
India Shining CSR Award - Wockhardt Group 2011<br />
International Setup<br />
• Pipe & Coating facility in Arkansas, US<br />
• Pipe & Coating Facility in Dammam, Saudi Arabia<br />
• Christy, UK<br />
• Offices in Manhattan, NY and Houston, TX - US<br />
<strong>Welspun</strong> Corp STAR PERFORMER – GAIL India Ltd - 2011<br />
<strong>Welspun</strong> India Sustainability Award - Walmart - 2007<br />
<strong>Welspun</strong> India 4 Gold Trophies for Outstanding Export Performance –<br />
Textile Promotion Council (TEXPROCIL) - 2007
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
WCL – An Introduction<br />
• WCL, flagship company of <strong>Welspun</strong> Group, is one of the largest pipe<br />
manufacturing companies in the world<br />
• Incorporated in 1995, the Company offers a complete range of high<br />
grade line pipes ranging from 1/2 inch to 121 inches used inter alia for<br />
transmission of oil & gas<br />
• Partner of Choice for more than 50 Oil & Gas Giants across the globe<br />
with a geographically diverse client base including Chevron, Exxon Mobil,<br />
Saudi Aramco, British Gas , Kinder Morgan etc<br />
• International footprint<br />
• Accredited with ISO 9001, ISO 14001 and OHSAS 18001 certifications<br />
• Strong order book of 1.22 million MT ~ US$ 1.6 billion<br />
Shareholding Pattern, as on Sept 30, 2012<br />
Consolidated Total Revenues<br />
(INR Mn)<br />
105,000<br />
90,000<br />
75,000<br />
60,000<br />
45,000<br />
30,000<br />
15,000<br />
0<br />
US $ Mn<br />
(INR Mn)<br />
12,200<br />
9,200<br />
6,200<br />
3,200<br />
200<br />
US $ Mn<br />
57,395<br />
73,503<br />
80,221<br />
89,766<br />
46,104<br />
2008-09 2009-10 2010-11 2011-12 H1 2012-13<br />
(1)<br />
1,250<br />
(2)<br />
1,637<br />
1,799 (3)<br />
(4)<br />
1,765<br />
(5)<br />
842<br />
104<br />
(1)<br />
252<br />
259 (3) 142 (4)<br />
75 (5)<br />
13,186<br />
14,461<br />
11,120<br />
6,348<br />
4,084<br />
2008-09 2009-10 2010-11 2011-12 H1 2012-13<br />
Operational EBITDA<br />
Summary Market Statistics<br />
Public, Banks,<br />
Financial Institutions<br />
and others<br />
39.90%<br />
Promoter<br />
37.96%<br />
As of November 19, 2012 INR Mn US$ Mn (6)<br />
Share Price (INR/ US$) 105.00 1.91<br />
FII<br />
21.89%<br />
Market Capitalization * 27,664 503<br />
Enterprise Value (7) 62,166 1,131<br />
Mutual Funds<br />
0.25%<br />
Note<br />
1. Exchange rate FY09 US$ 1 = Rs.45.91<br />
2. Exchange rate FY10 US$ 1 = Rs.44.90<br />
3. Exchange rate FY11 US$ 1 = Rs.44.59<br />
4. Exchange rate FY12 US$ 1 = Rs.50.87<br />
Note<br />
5. Exchange rate H1 FY13 US$ 1 = Rs. 54.737<br />
6. Exchange rate as on November 19, 2012; US$ 1 = Rs. 54.945<br />
7. Net Debt at INR 34,502 million as on September 30, 2012<br />
* Total # shares outstanding: 263.47 million including 35.04 million of CCD’s due for conversion in February 2013
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
WCL – An Introduction<br />
State of the art pipe and plate manufacturing capacities worldwide<br />
PIPES:<br />
LSAW:<br />
•Anjar and Dahej, India<br />
PLATES:<br />
HSAW:<br />
•Anjar, Dahej and Mandya, India<br />
•Dammam, Saudi Arabia<br />
•Little Rock, Arkansas, USA<br />
ERW:<br />
•Anjar, India<br />
•Little Rock, Arkansas, USA (to be commissioned by Q4 FY13)<br />
COATING:<br />
•Anjar and Dahej, India<br />
•Dammam, Saudi Arabia<br />
•Little Rock, Arkansas, USA<br />
• Anjar, India
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
Global Manufacturing Capacities<br />
2,500<br />
2,000<br />
1,500<br />
1,000<br />
Manufacturing Capacities in ‘000 MTPA<br />
500<br />
-<br />
700<br />
1,350<br />
175<br />
200<br />
LSAW HSAW ERW Total<br />
Pipes<br />
Anjar, Dahej and Mandya<br />
175<br />
2,250<br />
1,500<br />
Plates<br />
New<br />
Capacities<br />
Current<br />
Capacities<br />
Little Rock, Arkansas, USA<br />
Current Capacities<br />
Anjar,<br />
India<br />
Dahej,<br />
India<br />
Mandya,<br />
India<br />
Dammam, Saudi Arabia<br />
Dammam,<br />
Little Rock,<br />
US<br />
Plate-cum-Coil Mill<br />
In ‘000 MTPA<br />
Total<br />
Capacity<br />
LSAW 350 350 700<br />
HSAW 500 50 150 300 350 1,350<br />
ERW 200 175* 375*<br />
Total Pipe<br />
Capacity<br />
Plate & Coil 1,500<br />
Coating<br />
(mn mtr sq)<br />
1,050 400 150 300 475* 2,425<br />
7.75 6.5 4.5 7.0 25.75<br />
* New Capacity to be commissioned by Q4 FY13<br />
• Premier integrated set-up for manufacturing<br />
welded pipes with state-of-the-art-technology<br />
geared to meet the requirements of the global<br />
industry<br />
• The Longitudinal Pipes division (LSAW)<br />
has a capacity of 350,000 MTPA at<br />
Dahej<br />
• The New Longitudinal Pipe Plant<br />
(LSAW) plant at Anjar has a capacity of<br />
350,000 MTPA<br />
• The Spiral Pipes division (HSAW) at<br />
Dahej and Anjar together have a<br />
capacity of 550,000 MTPA<br />
• The Spiral Pipes division (HSAW) at<br />
Mandya (Karnataka) has a capacity of<br />
150,000 MTPA<br />
• The ERW Pipes division at Anjar has a<br />
capacity of 200,000 MTPA<br />
• Manufacturing facility on a 740-acre site<br />
adjacent to the Little Rock Port Authority<br />
commissioned in February 2009<br />
• This API certified facility currently employs<br />
443 people and is capable of producing<br />
350,000 MTPA of HSAW pipes annually<br />
for the use of the oil and gas industry<br />
• It also has Coating and Double Jointing<br />
capabilities<br />
• The construction of the new ERW mill with<br />
175,000 MTPA capacity is underway and<br />
should be commissioned Q4 FY13 as per<br />
the schedule.<br />
• Manufacturing facility of 300,000<br />
MTPA of HSAW pipes with<br />
Coating facility<br />
• Recently commissioned coating<br />
facility of 1.0 mn sq mtrs<br />
• This backward integration at<br />
Anjar, India has annual capacity<br />
to produce 1,500,000 MTPA of<br />
Plate and Coil with plates (up to<br />
12.5 mtrs in length, 140 mm<br />
thickness and 450 mm width) and<br />
Coil (up to 2800 mm width and 25<br />
mm thickness) with strength of<br />
120,000 PSI
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
8<br />
Growth to Infinity<br />
Revenue<br />
Rs. 46,104 mn.<br />
Growth<br />
H1 2013<br />
ERW Plant construction in US on schedule<br />
Mandya plant expansion completed<br />
Rs. 89,766 mn.<br />
2012<br />
- 350,000 tons LSAW capacity in Anjar commissioned<br />
- Initiated Mandya Plant Capacity Expansion to 150,000 MT<br />
- Initiative of Setting up new ERW Plant 175,000 tons in US<br />
Rs. 80,221 mn.<br />
2011<br />
Saudi Plant - capacity of 300,000 MTPA operational<br />
100,000 MTPA HSAW Plant at Mandya operational<br />
Rs. 73,503 mn.<br />
2010<br />
Anjar capacity expansion of 350,000 tons and HSAW capacity<br />
of 100,000 tons in Mandya initiated<br />
Rs. 57,395 mn. 2009<br />
Rs. 39,945 mn. 2008<br />
350,000 tons US Spiral Mill commissioned<br />
150,000 tons Spiral Mill commissioned<br />
Recognized 2 nd largest pipe producer in<br />
the world by Financial Times, UK<br />
Rs. 26,834 mn.<br />
2007<br />
Anjar Facility , A Key Contributor<br />
Rs. 18,298 mn.<br />
2006<br />
Approvals from O&G majors for new facility<br />
Rs. 10,385 mn.<br />
2005<br />
New Capacity at Anjar, Gujarat for HSAW & Coating<br />
Rs. 8,277 mn.<br />
2004<br />
Merger of coating J.V. with WCL<br />
Rs. 2,565 mn.<br />
Rs. 585 mn.<br />
Rs. 180 mn.<br />
1998<br />
2000<br />
2001<br />
Pipe Coating in JV with EUPEC, Germany<br />
Dahej, Gujarat<br />
LSAW, Dahej, Gujarat<br />
HSAW, Dahej, Gujarat<br />
Incorporated<br />
1995<br />
Embarked on a Growth Journey<br />
* Annualized on basis of H1 FY13 Revenue
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
<strong>Welspun</strong> Corp Limited: Strong Value & Growth Story<br />
1<br />
Strong Industry Fundamentals<br />
2<br />
Robust Business Fundamentals<br />
3<br />
Global Footprint<br />
4<br />
Execution – Strong Management Team & World Scale Capabilities<br />
5<br />
Financials
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
1. Strong Industry Fundamentals<br />
Relatively Few Major Players<br />
• Highly capital intensive industry with high barriers to entry<br />
• Niche markets effectively captured by <strong>Welspun</strong><br />
• Reliability and reputation for excellence are paramount, as<br />
pipelines are used for critical applications such as oil and<br />
gas transport<br />
• Prospects for the industry brightening with oil prices at<br />
sustainable levels for Oil & Gas firms.<br />
Global Demand<br />
• Business potential of around US$ 482 Bn (Source Simdex )<br />
• Shale Gas rapidly increasing its share in US – 13.6 trn cu ft<br />
by 2035 from 5.0 trn cu ft in 2010(source : EIA Energy<br />
Outlook 2012)<br />
• Replacement of the old pipelines in US<br />
• US oil boom is expected to enhance pipeline demand<br />
• Alaska Pipeline project - another boost to the demand for<br />
pipes (35 trn cu. Ft. discovered Natural Gas till early 2012)<br />
Domestic Demand<br />
• Low pipeline penetration in India provides huge potential<br />
• Natural Gas as a source of energy is growing at a rapid pace<br />
and shall grow the demand for pipelines<br />
• Petroleum & Natural Gas Regulatory Board (PNGRB)<br />
– Rs. 8.5 bn J&K project awarded to GSP consortium,<br />
- Approved 1104 km Kochi – Koottand – Bangalore- Mangalore<br />
in 2012.<br />
• City Gas Distribution – 200 Cities by 2015<br />
• Liquefied Natural Gas (LNG) terminals – 18.6 MTPA through 3<br />
existing terminals<br />
• Water Infrastructure projects under the 12 th Plan and JNNURM<br />
Company<br />
<strong>Welspun</strong> is well placed, with global clients and state-ofthe-art<br />
technology, to capitalize on this opportunity<br />
International Demand Outlook 2012 –<br />
2017 (Future Pipeline Projects)<br />
Region<br />
Projects<br />
Total<br />
Length<br />
(kms)<br />
Total Length<br />
(kms)<br />
Quantity<br />
(MMT)<br />
Quantity<br />
(KMT) (1)<br />
Business<br />
Potential<br />
(US$<br />
Bn) (1)<br />
North America 238 71,000 59 80<br />
Latin America 66 38,000 32 59<br />
Europe 153 42,000 35 79<br />
Africa 65 24,000 20 29<br />
Middle East 149 42,000 35 65<br />
Asia 129 69,000 13 126<br />
Australasia 74 22,000 3 44<br />
Total 874 308,000 62 482<br />
Source: www.simdex.com November 2012 data update<br />
Domestic Market Size<br />
Business<br />
Potential<br />
(US$ Bn) (2)<br />
GAIL* 6,642 1,328 1.6<br />
RGTIL 2,628 526 0.6<br />
IOCL 4,366 874 1.0<br />
Total 13,636 2,728 3.2<br />
Source: *GAIL India Ltd <strong>Presentation</strong> May 2012<br />
Source: Basic Stats Report – www.petroleum.nic.in<br />
Share of Expected Demand 2012 - 2017<br />
Global Demand for Pipes<br />
Proposed pipeline of GAIL<br />
Phase I (Under Execution)<br />
Name of Pipeline<br />
Length<br />
(Kms)<br />
Cost<br />
(Rs Cr)<br />
Add. Cap<br />
(MMSCMD)<br />
DVPL Ph -II / Vijaypur Dadri 1,109 10,764 80<br />
Dadri - Bawana - Nangal 594 2,358 31<br />
Chainsa - Jhajjhar - Hissar 349 1,315 35<br />
Sub Total 2,052 14,437 146<br />
Phase II (Approved in 2009)<br />
Name of Pipeline<br />
Length<br />
(Kms)<br />
Cost<br />
(Rs Cr)<br />
Add. Cap<br />
(MMSCMD)<br />
Jagdishpur - Haldia 2,050 7,596 32<br />
Dabhol - Bangalore 1,414 4,994 16<br />
Kochi - Mangalore - Bangalore 1,126 3,263 16<br />
Sub Total 4,590 15,853 64<br />
Grand Total 6,642 30,290 210<br />
Source GAIL India <strong>Investor</strong> <strong>Presentation</strong> , May 2012<br />
Source: Simdex and Industry Sources 1. Conversion rate of 200 tons/ km 2. As illustrated in the adjoining tables<br />
Australasia<br />
6%<br />
Asia<br />
24%<br />
Middle<br />
East<br />
13%<br />
Africa<br />
6%<br />
North<br />
America<br />
16%<br />
Europe<br />
24%<br />
Source: www.simdex.com Aug 2012 data update<br />
Latin America<br />
11%
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
1. Strong Industry Fundamentals<br />
Business Strategy and Outlook<br />
• Outlook for the pipe business remains positive amidst challenges in the global economy.<br />
• Continued new pipe orders both locally and internationally during such challenging times on the back of its strong customer reach<br />
and proven execution track record.<br />
• Key demand markets continue to be North America, Middle East and India; potential for new markets in Latin America, Africa and<br />
Asia driven by strong growth in energy and oil demand.<br />
• New shale gas discoveries, potential export of oil and gas from the Americas and demand from the replacement market in the<br />
coming years shall bode well for the industry.<br />
• Key differentiating factor going forward - ability to offer a portfolio of high quality products to<br />
customers.<br />
• Confident of positive growth through higher utilization levels across manufacturing capacities.<br />
• Saudi plant booked till the end of next year; US plant booked till November 2013.<br />
• Strong customer relationship enables repeat orders from key customers.<br />
• The Plates, DRI and Infra businesses continue to be challenging amidst difficult steel and infra<br />
market conditions.
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
2. Robust Business Fundamentals - Healthy Order Book<br />
Strongly Positioned<br />
• Strong presence in 2 of the bigger Oil & Gas markets – North America and Middle<br />
Consistent Production<br />
‘000 MT<br />
East; well positioned to take advantage of higher realization margins in Latin<br />
American markets.<br />
• WCL marquee clients - Exxon Mobil, Kinder Morgan, El Paso and GAIL<br />
• Long term contract - TransCanada & Statoil, Framework Agreement - Chevron<br />
1000<br />
800<br />
600<br />
400<br />
717<br />
193<br />
814<br />
384<br />
958<br />
819<br />
500 507<br />
398<br />
251<br />
*Current Order book (1,227K MT of pipes and 20K MT of external plates) stands<br />
at US$ 1.6 billion<br />
Pipe Orders Booked Pipe Orders Executed Closing Pipe Orders<br />
Year MT (in '000 tons) MT (in '000 tons) MT (in '000 tons)<br />
FY 2008-09 807 695 781<br />
FY 2009-10 824 814 791<br />
FY 2010-11 844 909 726<br />
FY 2011-12 1,163 835 1,029<br />
H1 FY 2012-13 557 359 1,227<br />
*Current Pipe Order Book – Geographical Distribution by Volume<br />
Domestic<br />
16%<br />
200<br />
0<br />
100%<br />
80%<br />
60%<br />
40%<br />
20%<br />
0%<br />
FY 09 FY 10 FY 11 FY 12 H1 FY13<br />
Total Pipe Production Total Plate Production<br />
Export-Domestic Revenue Break up %<br />
33% 34%<br />
48%<br />
67% 82% 72% 71% 66%<br />
52%<br />
FY07 FY08 FY09 FY10 FY11 FY12<br />
*<br />
Export<br />
Domestic<br />
Export<br />
84%<br />
* FY12 pipe exports by value are ~ 70%, but the above figure has gone down<br />
due to consolidation of various businesses
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
2. Robust Business Fundamentals – Leadership Position<br />
Global Market Expansion<br />
World’s largest diameter steel pipe producers (1)<br />
2007 output (million tonnes)<br />
Salzgitter/Europipe* (Germany) 1.3<br />
Saudi Arabia<br />
Iraq<br />
<strong>Welspun</strong> (India) 1.0<br />
Canada<br />
Spain<br />
Venezuela<br />
Russia<br />
JFE (Japan) 0.7<br />
Sumitomo (Japan) 0.7<br />
US (Trader Mkt.)<br />
US (Projects)<br />
Mexico<br />
Peru<br />
Bolivia<br />
Algeria<br />
Egypt<br />
Columbia<br />
Oman<br />
Qatar<br />
Kuwait Indonesia<br />
Sudan<br />
China<br />
Bangladesh<br />
Thailand<br />
Malaysia<br />
Evraz** (Russia) 0.6<br />
Nippon Steel (Japan) 0.6<br />
Riva (Italy) 0.6<br />
PSL (India) 0.5<br />
JSW (India) 0.3<br />
ArcelorMittal (Luxembourg) 0.2<br />
Year 2000–2001 Year 2001–2002 Year 2002–2003 Year 2003–2004 Year 2004–2005<br />
Year 2005–2006 Year 2006–2007 Year 2007–2008 Year 2008–2009<br />
Year 2010-2011<br />
Year 2011-2012<br />
Year 2009–<br />
2010<br />
Stupp (US) 0.1<br />
Tata/Corus (India/UK/Netherlands) 0.1<br />
Others*** 7.3<br />
What Sets WCL Apart From Competition<br />
• Decade Long Experience<br />
• One stop solution<br />
• High Capacity Equipment to Meet Future Demand<br />
• Proven execution and strong management experience<br />
Framework Agreements<br />
• Features<br />
- Selected few companies considered for supplies that meet stringent process of qualification<br />
- Typically customers with large requirement over a period of time<br />
- Flexibility in pricing terms and continuous business<br />
• Current Framework Agreements - Chevron<br />
WCL was rated 2 nd largest Pipe Company in 2007 and has since reached capacity of 2.25 MTPA<br />
Note<br />
1. As reported by Financial Times on April 13, 2008
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
3. Global Footprint - <strong>Welspun</strong>’s Worldwide Reach<br />
AMERICAS<br />
EUROPE & CIS<br />
Canada<br />
USA<br />
Mexico<br />
Bahamas<br />
Trinidad & Tobago<br />
Venezuela<br />
Colombia<br />
Peru<br />
Bolivia<br />
Spain<br />
Czech Rep.<br />
Algeria<br />
Nigeria<br />
Egypt<br />
Sudan<br />
Russia<br />
Iraq<br />
Qatar<br />
UAE<br />
Saudi Oman<br />
India<br />
DOMESTIC<br />
China<br />
Bangladesh<br />
Thailand<br />
Malaysia<br />
SOUTH<br />
EAST ASIA<br />
AUSTRALIA<br />
Indonesia<br />
Plant Locations<br />
Anjar, India<br />
Dahej, India<br />
Mandya, India<br />
Little Rock, USA<br />
Dammam, Saudi<br />
Marketing Offices<br />
Mumbai, India<br />
Delhi , India<br />
Houston, USA<br />
Dammam, Saudi Arabia<br />
Dubai, UAE<br />
MENA<br />
Plants<br />
Mktg Office<br />
Countries served<br />
Source: <strong>Welspun</strong> Corp Ltd.
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
3. Global Footprint – Relationship with Oil & Gas Majors<br />
AGIP, Jordan<br />
Al WASIT, UAE<br />
BECHTEL, US<br />
BRITISH GAS<br />
BRITISH PETROLEUM<br />
CHINA NATIONAL PETROLEUM CORPORATION<br />
CPMEC, China<br />
CHEVRON, US (Framework Agreement)<br />
DOW, US<br />
ELPASO, US<br />
EGYPTIAN GENERAL PETROLEUM CORPORATION<br />
ENTERPRISE, US<br />
EXXON-MOBIL (GOLDEN PASS PIPELINE), US<br />
GROUP FIVE , Saudi Arabia<br />
GAIL, India<br />
GASCO, UAE<br />
GASCO, Egypt<br />
GAZPROM, Russia (STROYTRANSGAZ)<br />
KINDER MORGAN, US<br />
N.A.O.C. - Nigeria<br />
NPCC, UAE<br />
NTPC, India<br />
ONGC, India<br />
PETRO CHINA<br />
PETRONAS, Malaysia<br />
PDO, Oman<br />
PGN, Indonesia<br />
QATAR PETROLEUM<br />
RELIANCE INDUSTRIES LIMITED, India<br />
SAIPEM, Italy<br />
SAUDI ARAMCO<br />
SHELL, US<br />
STOLT OFFSHORE – Acergy, UK<br />
SONATRACH, Algeria<br />
TOTAL, France<br />
TECHNIP, France<br />
TRANSCANADA (Long Term Contract)<br />
UNOCAL, US<br />
PERU LNG, US (HUNT OIL)<br />
VIETSOPETRO, Russia/Vietnam<br />
SWCC, India<br />
Accreditation Process<br />
A significant entry barrier<br />
Setting up plant<br />
1-2 years<br />
Seeking API<br />
approval<br />
1 year<br />
3 - 5 years<br />
Approval from<br />
major domestic<br />
/ international<br />
oil and gas<br />
companies<br />
2 – 3 years
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
4. Execution - Strong Management Team<br />
Mr. B.K. Goenka is the Chairman, and the chief architect<br />
of the <strong>Welspun</strong> Group. Today, with his entrepreneurial<br />
ability and professionalism, he has built up one of the most<br />
admired business conglomerates<br />
Mr. R.R. Mandawewala is the Group Managing Director,<br />
a key contributor in <strong>Welspun</strong>’s journey. A Chartered<br />
Accountant by profession and with over 25 years of<br />
experience, he has expertise varying from Textiles to SAW<br />
pipes.<br />
Mr. Braja K Mishra is the Managing Director of <strong>Welspun</strong><br />
Corp and is a prominent figure in the industry with long and<br />
varied experience. Has over 25 years of experience and<br />
posseses immense critical know-how about the pipe and<br />
plate industry<br />
Mr. Mintoo Bhandari, serves as Director on Board<br />
(Nominee of a shareholder) in WCL. Mr. Bhandari also<br />
serves on the board of directors of SOURCECORP, Dish TV<br />
India Limited and Wire & Wireless (India) Ltd. Mr.<br />
Bhandari graduated with an BS in Mechanical Engineering<br />
from MIT and with an MBA from the Harvard Business<br />
School.<br />
Mr. David J. Delie serves as President <strong>Welspun</strong> Tubular<br />
LLC. A graduate in Science (Electrical Engineering) and a<br />
Masters Degree in Engineering Management from the<br />
University of Pittsburgh, he has an extensive 33-year<br />
background in the steel and pipe industry. Mr Delie has<br />
served on the Board of Directors of Berg Steel Pipe Corp.,<br />
EB Pipe Coating, Inc., the American Iron & Steel Institute<br />
(AISI).<br />
Mr. B.R. Jaju serves as Director & CFO. A Chartered<br />
accountant by profession, member of Company Secretary (FCS),<br />
as well as a Law Degree (LL.B). He has a rich experience over<br />
30 years in finance and global M&A activities. Mr. Jaju has been<br />
awarded 3 times as Best Performing CFO in the year 2003, 2005<br />
and 2006, by the most credible nationally renowned jury.<br />
Mr. Akhil Jindal serves as Director, Group Strategy &<br />
Finance. He graduated with an Engineering Degree , MBA<br />
from Indian Institute of Management, Bangalore. Mr. Jindal<br />
is responsible for strategic inorganic/organic initiatives<br />
within the Group and has spearheaded large fund raisings,<br />
cross border acquisitions, private equity raisings and<br />
financial closure of projects exceeding over US$ 1 bn.<br />
Mr. Prashant Mukherjee serves as Director of Welded Pipes.<br />
A Graduate in Science (Engineering, Mech) with over 24 years<br />
experience mostly in the Oil & Gas Pipe Industry, Mr. Mukherjee<br />
has been instrumental in implementing expansion projects in the<br />
Company<br />
Mr. Vipul Mathur is the Director Sales & Marketing (Pipes).<br />
A Science Graduate and Masters in Business Administration<br />
(MBA) in Marketing, he has a rich experience of over 16 years in<br />
the Oil & Gas Pipe Industry<br />
Mr. Akbar Umatiya is Vice President & Unit Head of<br />
<strong>Welspun</strong> Middle East LLC (Saudi Plant) A technocrat<br />
Professional having more than 26 years of versatile experience in<br />
various fields like Operations, Project Executions and Marketing<br />
in India and Overseas. He has proven capability to perform in<br />
International environment studded with a mix of diverse cultures<br />
and to develop Technical and professional abilities for team<br />
building to enhance superior quality work.
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
4. Execution - Proven World Scale Capabilities<br />
LSAW Pipes<br />
ERW Pipes<br />
HSAW Pipes<br />
Coating of Pipes
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
4. Execution - Proven World Scale Capabilities<br />
Plates<br />
Plates<br />
US Plant<br />
Skilled Workforce
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
4. Execution - Proven World Scale Capabilities<br />
US Plant, Little Rock Arkansas<br />
Mr . B.K. Goenka (CMD, <strong>Welspun</strong>) with Arkansas Governor Mike Beebe<br />
• Commissioned in Feb’09 , state of the art HSAW, API approved mill with a Capacity of 350,000 MTPA;<br />
Utilization ~ 60% during FY12<br />
• Supplier to TCPL, El Paso, Enterprise, Exxon Mobil, etc<br />
• New ERW Mill of 175,000 MTPA capacity and Coating Line<br />
• $80 million investment; to be commissioned by Q4 FY13 and likely to ramp up production in FY14<br />
• By 2013, WCL to provide a complete range of HSAW & ERW pipes along with Coating and Double Jointing<br />
facilities from the Little Rock plant<br />
• Line Pipes from 6” to 60”<br />
• This will create one of the best and fully integrated facilities in this part of the world.
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
4. Execution - Proven World Scale Capabilities<br />
Saudi Plant, Dammam<br />
• State of the art Saudi Plant - 300,000 MTPA capacity provides a strong presence in the key Middle<br />
East pipes market<br />
• Opportunity to locate closer to customers and cater to their specific demands<br />
• Savings on transportation cost, and in the process improve operational efficiency<br />
• Key supplier in the Middle East; key clients - Saudi Aramco along with other recognized Oil & Gas<br />
majors<br />
• Recent approval from Saudi Aramco will enable WCL to cater to specific product requirements<br />
• Capabilities to deliver pipes from 18” to 100” and of the highest quality standards to meet the<br />
stringent requirements in the Middle East market<br />
• Coating plant with capacity of 1.0 million sq mtrs
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
Journey to become the most respected Pipe Company in the World<br />
How <strong>Welspun</strong> will sustain<br />
How <strong>Welspun</strong> reached here<br />
• Technology<br />
• Product profile<br />
• Approvals<br />
• Accreditations<br />
• Serving challenging orders<br />
• People<br />
• Zero Harm - Safety<br />
• Niche markets -deep offshore/ sour<br />
pipelines<br />
• Stringent client specifications<br />
• Local presence in key markets<br />
• Highly trained workforce<br />
• Zero Tolerance – Quality Standard<br />
Humble beginnings<br />
Today<br />
The future
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
5. Financials - Revenues & Margins<br />
Sales Volume (000’ MT)<br />
909<br />
1000<br />
816<br />
835<br />
695<br />
800<br />
600<br />
485<br />
531<br />
387<br />
359<br />
400<br />
250<br />
154<br />
200<br />
0<br />
FY 09 FY 10 FY 11 FY 12 H1 FY13<br />
Total Pipe Sales Total Plate Sales<br />
Profit After Tax (Rs. Mn)<br />
Consolidated Revenues (Rs. Mn)<br />
100,000<br />
80,000<br />
60,000<br />
40,000<br />
20,000<br />
-<br />
57,395<br />
73,503<br />
80,221<br />
89,766<br />
46,104<br />
FY 09 FY 10 FY 11 FY 12 H1 FY13<br />
(1)<br />
(2)<br />
(3)<br />
US$ Mn 1,250 1799<br />
1,637<br />
Operational EBITDA (Rs. Mn)<br />
(6)<br />
(4)<br />
1679<br />
(5)<br />
470<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
1,000<br />
-<br />
2,135<br />
6,104 6,330<br />
2,385<br />
118<br />
FY 09 FY 10 FY 11 FY 12 H1 FY13<br />
*<br />
**<br />
***<br />
****<br />
US$ Mn<br />
47<br />
(1)<br />
(2)<br />
136<br />
(3)<br />
142<br />
(4)<br />
45<br />
(5)<br />
2<br />
US$ Mn<br />
(1) (2) (3) (4)<br />
138 294 324 208<br />
75<br />
(5)<br />
Notes<br />
1. Exchange rate FY09 US$1 = Rs.45.91<br />
2. Exchange rate FY10 US$1 = Rs.44.90<br />
3. Exchange rate FY11 US$1 = Rs.44.59<br />
4. Exchange rate FY12 US$1 = Rs.50.87<br />
5. exchange rate H1 FY13 US$1 = Rs.54.737<br />
Notes<br />
6. * Includes recovery of past forex provisioning ( in FY09) , which is reflected in better realization and cost of material<br />
7. ** Includes export rebate of Rs. 734 million on receipt of favorable judgment from Honorable Supreme Court. and provision of<br />
Rs. 2,007 million on account of settlement with one of the customers thereby ending long pending litigation<br />
8. *** FY12 operational performance impacted by foreign exchange provisions of Rs 1,244 million and provisions made towards<br />
amicable settlement with a customer of Rs 649 million. Total Foreign Exchange provision was Rs. 1,517 million<br />
9. **** Includes Rs. 912 million of foreign exchange provisions
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
5. Financials – Balance Sheet Extract (Consolidated)<br />
Equity & Liabilities – H1 FY13 & FY12<br />
(Rs. Million)<br />
Particulars 30-Sep-12 31-Mar-12<br />
Shareholders’ funds<br />
Share capital 1,139 1,139<br />
Reserves and surplus 40,743 40,117<br />
Sub-Total- Shareholders's Funds 41,882 41,256<br />
Compulsorily Convertible Debentures 7,884 7,884<br />
Total Net Worth 49,766 49,139<br />
Minority Interest 3,079 3,433<br />
Non-current liabilities<br />
Long-term borrowings 43,378 39,714<br />
Deferred Tax Liabilties (Net) 5,343 5,036<br />
Other long-term liabilities 3,437 3,405<br />
Long-term provisions 287 244<br />
Sub-Total Non Current Liabilities 52,445 48,400<br />
Current liabilities<br />
Short-term borrowings 7,482 7,773<br />
Trade payables 31,373 32,923<br />
Other current liabilities 18,581 14,885<br />
Short-term provisions 1,672 1,741<br />
Sub-Total Current Liabilities 59,108 57,322<br />
TOTAL-Equity and liabilities 164,397 158,294
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
5. Financials – Balance Sheet Extract (Consolidated)<br />
Assets – H1 FY13 & FY12<br />
(Rs. Million)<br />
Rs. Million 30-Sep-12 31-Mar-12<br />
Non-current assets<br />
Fixed assets 66,081 63,625<br />
Goodwill on consolidation 9,888 9,888<br />
Non-current investments 464 355<br />
Deferred Tax Assets (Net) 80 66<br />
Long-term loans and advances 5,312 5,061<br />
Other non-current assets 288 357<br />
Sub-Total- Non Current Assets 82,113 79,351<br />
Foreign Currency Monetory Item Translation<br />
Difference Account 459 323<br />
Current assets<br />
Current investments 18,245 19,431<br />
Inventories 32,613 25,827<br />
Trade receivables 18,377 15,260<br />
Cash and Cash equivalents 4,420 10,255<br />
Short-term loans and advances 6,231 5,809<br />
Other current assets 1,938 2,038<br />
Sub-Total- Current Assets 81,825 78,620<br />
TOTAL-Assets 164,397 158,294
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
5. Financials – Net Worth & Debt Profile<br />
Current Net Worth<br />
• Net Worth of the Company at the end of Q2 FY13 - Rs. 49,766 million including<br />
Share Capital, Reserves & Surplus, and CCDs<br />
• Gross Debt after Q2 FY13 - Rs. 57,167 million including Long Term Borrowing, Short Term<br />
Borrowing and current portion of Long Term Borrowing<br />
• Cash & Liquid Investment - Rs. 22,665 million including Cash & Cash Balances and<br />
Current Investments<br />
• Net Debt - Rs. 34,502 million<br />
Net Debt / Net Worth - 69%
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
Q2 and H1 - FY13 Highlights<br />
Key Snapshot<br />
• 1.22 million MT outstanding pipe<br />
order book<br />
• Sales up by 21% in H1 FY13 Y-o-Y<br />
• Bagged new orders of Rs.18 billion<br />
(212K MT of pipes, and plates) from<br />
domestic and international Oil & Gas<br />
majors from key markets such as<br />
India, Africa and the Americas during<br />
the second quarter<br />
Consolidated Financial Summary in Q2 & H1 FY13<br />
Breakdown of Production and Sales in Q2 & H1 FY13<br />
(Rs. Mn)<br />
Particulars *Q2 FY13 Q2 FY12 *H1 FY13 # H1 FY12<br />
Sales 20,606 20,538 46,104 38,097<br />
EBITDA 2,171 2,674 4,538 5,989<br />
EBITDA margin 10.5% 13.0% 9.8% 15.7%<br />
Cash PAT 1,344 1,622 2,488 3,780<br />
The above results are after taking into consideration, loss of approximately 70 days of production at the US<br />
plant due to fire. The plant has recommenced production in the later part of September 2012 and is now in full<br />
swing.<br />
# Includes Rs.912 million of foreign exchange provisions for H1 FY13<br />
Volume (in KMT) Q2 FY13 Q2 FY12 H1 FY13 H1 FY12<br />
Production<br />
Pipes 181 199 398 379<br />
Plates & Coils 101 102 251 210<br />
Sales<br />
Total Pipes<br />
Consolidated<br />
181 210 359 413<br />
Plates & Coils* 102 104 250 219<br />
Status of Projects<br />
Capacity expansion of Mandya Plant completed and manufacturing underway in the newly completed facility.<br />
Construction of ERW Plant in Little Rock, Arkansas, US on schedule and expected to be commissioned by Q4 FY13.
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
Summary<br />
1 Strong Industry<br />
Strong Industry<br />
Fundamentals<br />
Fundamentals<br />
• • Capital Capital intensive, high<br />
barriers to to entry<br />
• • North America expected<br />
to<br />
to lead demand<br />
5 Revenues & Margins<br />
• Maintaining profitable<br />
growth in challenging<br />
environment<br />
2<br />
Robust Business<br />
Fundamentals<br />
• Strong volume growth<br />
• Order Book in excess of US$<br />
• 1.6 billion<br />
• Capacities of global size<br />
• Comprehensive product mix<br />
4 3<br />
Global Footprint<br />
Strong Management Team<br />
with Proven Execution<br />
Capabilities<br />
• Recognized by the FT as the<br />
second largest steel pipe<br />
producer in the world in 2007<br />
• First Indian company to supply<br />
pipes for offshore projects in US<br />
• Presence across more than<br />
25 countries<br />
• Pre-approved with more<br />
than 50 O&G Majors
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
<strong>Welspun</strong> on the Path of Global Leadership<br />
Global Leadership Serve Globally, Act Locally<br />
Scale Leadership<br />
Scale of operations through large economic plants across the globe<br />
Cost Leadership<br />
Produce world class products at the least cost and maintain competitive edge<br />
Technology<br />
Leadership<br />
Adopt and innovate cutting-edge technology to satisfy stringent<br />
requirements of customers<br />
Quality Leadership<br />
Consistent focus on quality at all levels; be the best in delighting customers<br />
Process Leadership<br />
Most efficient and effective processes to achieve optimal utilizations<br />
People Leadership<br />
Best in class people : Produce extraordinary results
<strong>Welspun</strong> Group | <strong>Welspun</strong> Corp Ltd<br />
Thank You<br />
For further details, please contact:<br />
Akhil Jindal<br />
Director – Group Strategy and Finance<br />
Email: akhil_jindal@welspun.com<br />
Navin Agarwal<br />
VP - Group Strategy and Finance<br />
Email: navin_agarwal@welspun.com<br />
Company Website: http://www.welspuncorp.com