welspun corp presentation 09 may 2011
TRANSCRIPT
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On The Path of Global Leadership
WELSPUN CITY, ANJAR
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Disclaimer
Certain statements made in this presentation may not be based on historical information or facts and may be forward looking sta tements, including those relating to general business plans and strategy of Welspun Corp. Limited (WCL"), its future outlook and growth prospec ts, and future
developments in its businesses and its competitive and regulatory environment. Actual results may differ materially from these forward-looking statements due to a number of factors, inter alia including future changes or developments in WCL's business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological changes and political, economic, regulatory and social conditions in India.This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer invitation, or a solicitation of any offer, to
purchase or sell, any shares of WCL and should not be considered or construed in any manner whatsoever as a recommendation that any person should subscribe for or purchase any of WCL's shares. Neither this presentation nor any other documentation or information (or any part thereof)
delivered 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 for or purchase any of its shares.
WCL, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information contained in this presentation,
unless otherwise specified is only current as of the date of this presentation. WCL assumes no responsibility to publicly amend, modify or revise any forward looking statements contained herein, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this document, the information contained herein is based on management information and estimates. The information contained herein is
subject to change without notice and past performance is not indicative of future results. WCL may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. This presentation may not be copied and
disseminated in any manner.
THE INFORMATION PRESENTED HERE IS NOT AN OFFER INVITATION OR SOLICITATION OF ANY OFFER TO PURCHASE OR SELL ANY EQUITY SHARES OR ANY OTHER SECURITY OF WCL.
This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.
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 Japan.
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Welspun Group
Brief Synopsis
One of the fastest emerging global groups, with multiplecountries strategy and manufacturing facilities
Group companies enjoys market leadership positions :
Top 2 Large Diameter Pipe Company in World -Financial Times, UK
Globally renowned towel company
Global relationship with marquee clients including Fortune100 companies like Exxon Mobil (Golden Pass Pipeline),Chevron, Shell, Bechtel, Wal- Mart, Target etc
Equity investment by renowned investors like ICICI Life,Temasek (Govt. of Singapore), 3i (UK), Genesis (UK)
Excellent relationship with domestic and international lenders
Key Markets
80% export mainly to US, Europe, Latin America, Middle Eastetc
International Setup
Christy, UK
Sorema, Portugal
Textile facility in Mexico
Office in Manhattan-NY, Huston-US
Pipe facility in Arkansas, US
Pipe Facility in Saudi Arabia (In process)
Welspun Corp Economic Times Emerging Company of the Year Awardfor Corporate Excellence - 2008
Welspun India Gold Trophy for Best Exporter Textile Promotion Council (TEXPROCIL) 2008
Welspun Corp 2nd Largest (Large Diameter) Line Pipe Manufacturerin the World - Financial Times UK - 2008
Welspun India Supplier of the Year Award J C Penny - 2008
Welspun India Earth Care Awards Times of India andJindal Steel Ltd - 2008
Welspun India Sustainability Award - Walmart - 2007
Welspun Corp One of the fastest growing large companies in India Business Today - 2007
Welspun India 4 Gold Trophies for Outstanding Export Performance Textile Promotion Council (TEXPROCIL) - 2007
Global Recognitions
Welspun Corp Star Performer Award for the year 2008-09All India Export Excellence Awards - EEPC 2010
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WCL An Introduction
WCL, flagship company of Welspun Group, is one of thelargest pipe manufacturing company in the world
Incorporated in 1995, the Company offers a complete rangeof high grade line pipes ranging from inch to 100 inchused inter alia for transmission of oil & gas
Partner of Choice for more than 50 Oil & Gas Giants acrossthe globe with a geographically diverse client base includingChevron, Exxon Mobil (Golden Pass Pipeline), Saudi Aramco,British Gas , Kinder Morgan etc
International footprint
Accredited with ISO 9001, ISO 14001 and OHSAS 18001certifications
Strong order book of U.S. $ 1.5 Bn
26,834 39,94557,395
73,50358,604
020,00040,00060,00080,000
2006-07 2007-08 2008-09 2009-10 9M 2010-11
(INR MM)CAGR (07-10): 40%
617 991 1,250US $ MM
2,666
5,845 4,768
11,3019,447
5003,5006,5009,500
12,500
2006-07 2007-08 2008-09 2009-10 9M 2010-11
(INR MM) CAGR (07-10): 62%
61 145 104US $ MM
Gross Profit
Steady Growth in Revenues and ProfitConsolidated Total Revenues
Summary Market Statistics
As of May 09, 2011 INR MM US$ MM (6)
Share Price (INR/ US$) 189.05 4.22
Market Capitalization 38,693 865
Enterprise Value (1) 46,042 1,029
41.07%
0.06%23.10%
35.77% Promoter
Mutual Funds
FII
Public, Banks and FinancialInstitutions
Shareholding Pattern, as on Mar. 31, 2010
Note1. Net Debt at INR 7,349 MM as on 31 Mar, 20102. Average exchange rate of US$1 = Rs 43.51 from 01-Apr-06 till 31-Mar-07
Note3. Average exchange rate of US$1 = Rs.40.29 from 01-Apr-07 till 31-Mar-084. Average exchange rate of US$1 = Rs.45.91 from 01-Apr-08 t ill 31-Mar-095. Average exchange rate of US$1 = Rs.44.90 from 01-Apr-09 t ill 31-Mar-106. Exchange rate of US$1 = Rs. 44.7300 on May 09 2011
1,637
252 (5)
(5)(4)(3)(2)
(2) (3) (4)
1311(6)
211(6)
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WCL An Introduction
Welspun Corp Limited (WCL)Promoters (41.07%) Public and Others (58.93%)
Welspun Plate and Coil MillDivision
Manufacturer of state-of-artPlates and Coils
Plates & Coils
Pipes
- Longitudinal (LSAW)
- Helical / Spiral (HSAW)- Electrical (ERW)
Welspun Pipes Inc, USA Welspun Natural ResourcesPvt. Ltd.Oil & Gas Exploration Activities
Welspun Tubular LLCManufacturer of Pipes,
Coating and Double jointing
Welspun Global Trade LLC C o r p o r a
t e S t r u c
t u r e
P r o
d u c
t s
M a n u f a c
t u r i n g
F a c
i l i t i e s
Premier integrated set-up for manufacturing weldedpipes. Installed state-of-the-art-technology and iscompletely geared to meet the requirements of theglobal industry. The Longitudinal Pipes division (LSAW) has a
capacity of 350,000 metric ton per annum. TheSpiral Pipes division (HSAW) has a capacity of
550,000 metric ton per annum. The ERW Pipes division has a capacity of 200,000
metric tonper annum. It also has Coating capabilities
Anjar & Dahej Pipe Mills With manufacturing facility on a 740-acre site adjacent
to the Li tt le Rock Por t Authori ty, the $150 mill ionfacility commissioned in February 2009.
This API certified facility currently employs more than300 people and is capable of producing 350,000 tonsof HSAW pipes annually for the use of the oil and gasindustry.
The facility can produce Pipes from 24 to 60 inches asouter diameter; 6 mm to 25 mm as wall thickness andlengthof 40 -80ft.
It also has Coating and Double Jointing capabilitiesand is a one-stop-solution provider to Welspun'svalued customers
Little Rock , Arkansas, USA This backward integration at Anjar, Kutch,
Gujarat, India has annual capacit y t oproduce 1.5 million tones of Plate and Coilwith plates (up to 4.5 meters wide, 140 mmthickness) and Coil (up to 2.8 meters wide,25 mm thickness) with strength of 120,000PSI.
This mill can cater to high end specializedproduct requirement of Line Pipe Industry(API grades), Shipping, Heavy construction,Bridges, Boiler plates, Wind blades etc.
Plate-cum-Coil Mill
WCL 100% WCL 100%
Oil and Gas
100% Beneficial Interest100% Beneficial Interest
Welspun Infratech Ltd.Infrastructure
(Welspun Projects ltd)
Welspun Energy LtdSolar & Renewable Energy
Renewable Energy &
Infrastructure
Dammam, Saudi Arabia Manufacturing facility of 300,000 tons of
HSAW pipes annually for the use of the oiland gas industry.
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Growth at Infinity
Merger of coating J.V. with WCL
New Capacity at Anjar, Gujarat for HSAW & Coating
Incorporated
350,000 tons US Spiral Mill commissioned
Approvals from O&G majors for new facility
Anjar Facility , A Key Contributor
Embarked on a Growth Journey
HSAW, Dahej, Gujarat
LSAW, Dahej, Gujarat
Pipe Coating in JV with EUPEC, Germany
Dahej, Gujarat
Growth 8
2006
2005
2004
2001
2000
1998
1995
Rs. 180 mn.
Rs. 585 mn.
Rs. 2,565 mn.
Rs. 8,277 mn.
Rs. 10,385 mn.
Rs. 18,298 mn.
2007Rs. 26,834 mn.
Rs. 39,945 mn. 2008Commissioning of Plate Mill & 43 MW Power Plant
Rs. 57,395 mn. 2009
Rs. 73,503 mn. 2010
- 100,000 tons HSAW Plant in KarnatakaoperationalInvestment in Middle East with HSAW
capacity of 300,000 MT operational- 350,000 MT pipe capacity addition under
implementation in IndiaForay into infra & pipe laying for O&G andwater through MSK Projects India Ltd.
9M FY 2010-11Rs. 58,604 mn.
Revenue
150,000 MT Spiral Mill commissioned
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Welspun Corp Limited: Strong Value & Growth Story
Strong Industry Fundamentals1
Global Footprint & Pre Approved with Oil & Gas Majors3
Robust Business Fundamentals & Healthy Order Book2
Strong Management Team with Proven Execution Capabilities4
Exponential Growth in Revenues & Margins5
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Proposed pipeline of GAILPhase I by 2011 (Under Execution)
Name of PipelineLength(Kms)
Cost(Rs Cr)
Add. Cap(MMSCMD)
DVPL Ph -II / Vijaypur Dadri 1,115 10,830 80
Dadri - Bawana - Nangal 646 2,349 31
Chainsa - Jhajjhar - Hissar 349 1,259 35
Sub Total 2,110 14,438 146
Phase II by 2012 (Approved in 2009)
Name of Pipeline Length(Kms)Cost
(Rs Cr)Add. Cap
(MMSCMD)
Jagdishpur - Haldia 2,050 7,596 32
Dabhol - Bangalore 1,389 5,014 16
Kochi - Mangalore - Bangalore 1,114 3,263 16
Sub Total 4,553 15,873 64
Grand Total 6,663 30,311 210
CompanyTotal Length
(kms)Quantity(KMT)(1)
BusinessPotential
(US$ Bn) (2)
GAIL 6,663 1,332 1.6
RGTIL 2,750 550 0.7
GSPL 5,675 1,135 1.4
Total 15,088 3,017 3.7
1. Strong Industry Fundamentals
Relatively Few Major Players
North America26%
Latin America5%
Europe18%Africa
7%
Midd le East17%
Asia18%
Australasia9%
Share of Expected DemandUntil 2016 Industry is highly capital intensive with high barriers to
entry
Niche markets exist which have been effectivelyexploited by Welspun Reliability and reputation for excellence are
paramount, as pipelines are used for criticalapplications such as oil and gas transport
Prospects for the industry brightening with oil pricesgaining strength
Welspun is well placed, with global clients and state-of- the-art technology, to capitalise on this opportunity
Source GAIL India Investor Presentation , August 2010
International Demand Outlook till 2016
Region Projects
Total
Length(kms) Quantity(MMT)(1)
BusinessPotential
(US$Bn) (2)
North America 185 64,578 13 15
Latin America 38 28,596 6 7
Europe 127 42,208 8 10
Africa 50 23,725 5 6
Middle East 120 39,346 8 9
Asia 126 69,278 14 17
Australasia 61 17,764 4 4
Total 707 285,495 57 69
Source: Simdex, US, Jan 2011 Update
Source: Simdex, US, Jan 2011 Update
Source: Industry Sources
Note 1. Conversion rate of 200 tonnes / km 2. Conversion rate of $1,200 / ton 3. As illustrated in the adjoining tables
Domestic Market Size
Source: GAIL India Ltd Presentation Aug 10 / Company data
Global Demand
Business potential of around USD 69 Bn (3) - Simdex Replacement of the old pipelines in US
New Gas is required to replace annual decline inexisting gas supplies in North America, which shallenhance demand for new pipelines
Shale Gas gradually increase its share in total gasrequirement in US
Alaska Pipeline project -another boost to the demandfor pipes
Domestic Demand Low pipeline penetration in India provides huge
potential Natural Gas as a source of energy is growing at a rapid
pace and shall grow the demand for pipelines Formation of the Petroleum & Natural Gas RegulatoryBoard (PNGRB) to give boost to trunk pipelines
City Gas Distribution set to take-off Liquefied Natural Gas (LNG) terminals projects to
enhance pipe demand Water Infrastructure projects: A Key driver for HSAW
pipes
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377501
670 718814
720
193
384 373
0
100
200
300
400
500600
700
800
900
FY06 FY07 FY08 FY09 FY10 9M FY11
Going Strength to Strength
FY07 FY09 FY10
Oil & Gas CoApproval 36 >50 >50
Production( '000 MT) 501 717 814
Revenue(US$ MM) 571 1,250 1,637
PAT(US$ MM) 36 47 136
No. of countries Global Global Global
Export Market 67% 76% 77%
2. Robust Business Fundamentals & Healthy Order Book
Strongly Positioned
350
1,300
200
1,850 1,500
350
350
(200)
200
600
1,000
1,400
1,800
2,200
LSAW H SAW ERW To talPipe
Plate Mill
Current Capacities
000 MT pa
Export Market Gaining DominanceProduction Growth
000 MT
77%76%83%67%
23%24%17%33%
0%
20%
40%
60%
80%
100%
FY07 FY08 FY09 FY10
Export Domestic
Welspun serves several marqueecustomers like Exxon Mobil (GoldenPass Pipeline), Kinder Morgan, Ruby(El Paso) and GAIL because of itsspecialized offerings
It has long term contracts with giantslike TransCanada; and frameworkagreements with Chevron, SaudiAramco, etc
Successfully expanded into highlycompetitive North and Latin America totake advantage of higher realizations
Pipes Plates
Existing Capacities New Capacities
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Process Process
Steel Slab(API Grade)
Steel Plates/Coils (API Grade)
Pipes(API Grade for O&G)
Selling Price (1):$ 850- 900 /ton.
Selling Price (1):
$ 1,000-1,050 /ton .Selling Price (1):
$ 1,300-1,400/ton .
Raw Steel
Welpsuns Value Chain (from Slabs to Pipes)
Process
2. Robust Business Fundamentals & Healthy Order Book
Backward integration into plates provides critical value advantage
Opportunity to service the high end steel category which is currently serviced through importsNote1. Indicative market prices
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Order Book
Orders Booked during FY 09 - $ 1.6 bn
Orders at the beginning of FY 10 - $ 1.6 bn
Orders Booked during FY 10 - $ 1.3 bn
Orders executed during FY 10 - $ 1.6 bn
Orders at the beginning of FY 11 - $ 1.4 bn
Orders Booked during FY 11 (YTD) - $ 1.4 bnOrders executed during 9M FY 10 - $ 1.3 bn
Current Orders in Hand (938 k Tonnes) - $ 1.5 bn
Raw material tied up for all outstanding orders
Majority of the shipping finalized
2. Robust Business Fundamentals & Healthy Order Book
Current Order Book Geographical Distribution by Volume
Some of the Top Clients for Pipes
Client CountryEnterprise USA
Transcanada Pipe Line Limited CanadaGas Authority of India Ltd. IndiaIndian Oil Corporation of India IndiaSaudi Aramco Middle-East
0%10%20%30%40%50%60%70%80%90%
Export Domestic
86%
14%
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http://www.ft.com/ -
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AGIP NTPC
BECHTEL ONGC
BRITISH GAS PETRO CHINA
BRITISH PETROLEUM PETRONAS, MALAYSIACHINA NATIONAL PETROLEUM CORPORATION PDO, OMAN
CPMEC, CHINA PGN, INDONESIA
CHEVRON (Framework Agreement) QATAR PETROLEUM
DOW RELIANCE INDUSTRIES LIMITED
RUBY (ELPASO) SAIPEM, SNAM
EGYPTIAN GENERAL PETROLEUM CORPO RATION S AUDI ARAMCO (Framework Agreement)
ENTERPRISE SHELL
EXXON-MOBIL (GOLDEN PASS PIPELINE) STOLT OFFSHORE Acergy
GAIL SONATRACH
GASCO, ABUD HABI TOTA LGASCO, EGYP T TECH NIP
GAZPROM (ST ROYTRANSGAZ) TRANSCANADA (Long Term Contract)
KINDER MOR GAN UNOCAL
MOGE, MYANMER PERU LNG (HUNT OIL)
N.A.O.C. - NIGERIA VIETSOPETRO
NPCC, ABU DHABI
3. Global Footprint & Pre Approved with Oil & Gas Majors
3 - 5 years
Setting up plant2 years
Seeking APIapproval
1 year
Approval frommajor domestic/ international
oil and gascompanies
2 3 years
Accreditation ProcessA significant entry barrier
http://www.chevron.com/http://www.chevron.com/http://www.chevron.com/http://www.chevron.com/http://images.google.com/imgres?imgurl=http://www2.cera.com/company_large_view/1,2703,121,00.GIF&imgrefurl=http://www2.cera.com/ceraweek2007/sponsors/1,3262,,00.html&usg=__Bc_Z7efXKcg2dzrpdXXjAPfKP8s=&h=131&w=150&sz=4&hl=en&start=2&um=1&tbnid=QoqfJ5-V1MiX8M:&tbnh=84&tbnw=96&prev=/images?q=china+national+petroleum&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.laohamutuk.org/Bulletin/2002/Jul/shell.jpg&imgrefurl=http://www.laohamutuk.org/Bulletin/2002/Jul/bulletinv3n5a.html&usg=__Quo9Fjsrg37DicB9xrWBPyVkAKQ=&h=366&w=400&sz=31&hl=en&start=2&um=1&tbnid=-tFRfxGpQO376M:&tbnh=113&tbnw=124&prev=/images?q=shell&hl=en&um=1http://images.google.com/imgres?imgurl=http://www2.cera.com/company_large_view/1,2703,121,00.GIF&imgrefurl=http://www2.cera.com/ceraweek2007/sponsors/1,3262,,00.html&usg=__Bc_Z7efXKcg2dzrpdXXjAPfKP8s=&h=131&w=150&sz=4&hl=en&start=2&um=1&tbnid=QoqfJ5-V1MiX8M:&tbnh=84&tbnw=96&prev=/images?q=china+national+petroleum&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.laohamutuk.org/Bulletin/2002/Jul/shell.jpg&imgrefurl=http://www.laohamutuk.org/Bulletin/2002/Jul/bulletinv3n5a.html&usg=__Quo9Fjsrg37DicB9xrWBPyVkAKQ=&h=366&w=400&sz=31&hl=en&start=2&um=1&tbnid=-tFRfxGpQO376M:&tbnh=113&tbnw=124&prev=/images?q=shell&hl=en&um=1http://images.google.com/imgres?imgurl=http://www2.cera.com/company_large_view/1,2703,121,00.GIF&imgrefurl=http://www2.cera.com/ceraweek2007/sponsors/1,3262,,00.html&usg=__Bc_Z7efXKcg2dzrpdXXjAPfKP8s=&h=131&w=150&sz=4&hl=en&start=2&um=1&tbnid=QoqfJ5-V1MiX8M:&tbnh=84&tbnw=96&prev=/images?q=china+national+petroleum&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.laohamutuk.org/Bulletin/2002/Jul/shell.jpg&imgrefurl=http://www.laohamutuk.org/Bulletin/2002/Jul/bulletinv3n5a.html&usg=__Quo9Fjsrg37DicB9xrWBPyVkAKQ=&h=366&w=400&sz=31&hl=en&start=2&um=1&tbnid=-tFRfxGpQO376M:&tbnh=113&tbnw=124&prev=/images?q=shell&hl=en&um=1http://images.google.com/imgres?imgurl=http://www2.cera.com/company_large_view/1,2703,121,00.GIF&imgrefurl=http://www2.cera.com/ceraweek2007/sponsors/1,3262,,00.html&usg=__Bc_Z7efXKcg2dzrpdXXjAPfKP8s=&h=131&w=150&sz=4&hl=en&start=2&um=1&tbnid=QoqfJ5-V1MiX8M:&tbnh=84&tbnw=96&prev=/images?q=china+national+petroleum&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.laohamutuk.org/Bulletin/2002/Jul/shell.jpg&imgrefurl=http://www.laohamutuk.org/Bulletin/2002/Jul/bulletinv3n5a.html&usg=__Quo9Fjsrg37DicB9xrWBPyVkAKQ=&h=366&w=400&sz=31&hl=en&start=2&um=1&tbnid=-tFRfxGpQO376M:&tbnh=113&tbnw=124&prev=/images?q=shell&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.topnews.in/files/British-Petroleum-Logo.jpg&imgrefurl=http://www.topnews.in/bp-employ-1000-new-hungarian-service-centre-2143085&usg=__rUCbVj5XSoW4rDB8_gX8MFauWc0=&h=300&w=240&sz=25&hl=en&start=5&um=1&tbnid=7rN_IaQKpWWR_M:&tbnh=116&tbnw=93&prev=/images?q=british+petroleum&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.russiablog.org/DowLargeLogo.jpg&imgrefurl=http://www.russiablog.org/2007/08/russia_part_of_dow_chemicals_g.php&usg=__3baqjOEoxYqdmU1zGNxfFe8qDxA=&h=218&w=600&sz=22&hl=en&start=2&um=1&tbnid=iomhW-hLCsrIUM:&tbnh=49&tbnw=135&prev=/images?q=dow+logo&hl=en&sa=N&um=1http://images.google.com/imgres?imgurl=http://www.iadc.org/conferences/Logos/saudi%20aramco%20logo.jpg&imgrefurl=http://www.iadc.org/conferences/Intl_Well_Control.htm&usg=__r2E9XYYQncupiOvyzHSivM_-fS8=&h=198&w=416&sz=17&hl=en&start=2&um=1&tbnid=J58tzxh8fWhuRM:&tbnh=59&tbnw=125&prev=/images?q=saudi+aramco+logo&hl=en&sa=N&um=1http://images.google.com/imgres?imgurl=http://www.uranustd.com/Portals/0/Clients%20Logo/npcc.jpg&imgrefurl=http://www.uranustd.com/OurClients/tabid/55/Default.aspx&usg=__XE9OSS7QrDsturq6gNV6167ll4k=&h=168&w=150&sz=14&hl=en&start=2&um=1&tbnid=OzKsfBHXnhgZgM:&tbnh=99&tbnw=88&prev=/images?q=npcc+abu+dhabi&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.arcticgaspipeline.com/images/Flags%20&%20Symbols/TransCanadaLOGO.jpg&imgrefurl=http://www.arcticgaspipeline.com/8-2002.htm&usg=__NjYS28GahDd4oxnGRUnnWy0h_Gs=&h=198&w=494&sz=38&hl=en&start=1&um=1&tbnid=rNgtTiMLpSYGuM:&tbnh=52&tbnw=130&prev=/images?q=transcanada&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.cconnection.org/Qatar_Petroleum_qp.gif&imgrefurl=http://www.cconnection.org/PortsconHome.htm&usg=__vXN6d1g0FkHXaciym8ldc8vnuR0=&h=180&w=170&sz=4&hl=en&start=1&um=1&tbnid=jzQI-6Rs5_PFUM:&tbnh=101&tbnw=95&prev=/images?q=qatar+petroleum&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.egas.com.eg/images/other_sites/gasco.gif&imgrefurl=http://www.egas.com.eg/Corporate_Overview/Other_Sites.aspx&usg=__ovCqVnWQtxU5py7XJGEZkPpC-1k=&h=107&w=220&sz=15&hl=en&start=2&um=1&tbnid=kEapvcp3BQr3hM:&tbnh=52&tbnw=107&prev=/images?q=gasco+egypt&hl=en&um=1http://images.google.com/imgres?imgurl=http://www.laohamutuk.org/Bulletin/2002/Jul/shell.jpg&imgrefurl=http://www.laohamutuk.org/Bulletin/2002/Jul/bulletinv3n5a.html&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4. Strong Management Team with Proven ExecutionCapabilities
Mr. L. T. Hotwani is Director, Supply Chain Managementof Welspun Corp Limited. With a rich experience of over 36years, Mr. Hotwani is instrumental in sourcing raw materialsand managing supply chain with global players
Mr. B.K. Goenka is the Chairman, and the chief architect
of the Welspun Group. Today, with his entrepreneurialability and professionalism, he has built up one of the mostadmired business conglomerates
Mr. R.R. Mandawewala is the Managing Director . He hasbeen a key contributor in Welspuns journey. A CharteredAccountant by profession and with over 20 years of experience, he has cross-industry expertise varying fromTextiles to SAW pipes.
Mr. M.L. Mittal serves as Executive Director . A CharteredAccountant by profession, Mr. Mittal has been instrumentalin arranging Long Term Loans and Working CapitalFacilities. During his tenure, the Company has successfullyfunded several expansions projects.
Mr. Akhil Jindal serves as Director of Corporate Affairs .He graduated with an Engineering Degree and thereafter an
MBA from Indian Institute of Management, Bangalore. Mr.Jindal is responsible for strategic inorganic/organicinitiatives within the Group and has spearheaded large fundraisings, cross border acquisitions, private equity raisingsand financial closure of projects exceeding over US$ 1 bn.
Mr. Asim Chakraborty is Executive Director and Plant Head
of the Anjar facility. A Civil Engineer from the University of Kolkata, Mr. Chakraborty has been instrumental in timelyconstruction of various projects
Mr. Vipul Mathur is the Director of Marketing & Sales(Pipes & Plates Division) . A Science Graduate and Masters inBusiness Administration (MBA) in Marketing, he has a richexperience of over 16 years in the Oil & Gas Pipe Industry
Mr. Prashant Mukherjee serves as Director of WeldedPipes . A Graduate in Science (Engineering, Mech) with over 24
years experience mostly in the Oil & Gas Pipe Industry, Mr.Mukherjee has been instrumental in implementing expansionprojects in the Company
Mr. B.R. Jaju serves as Director & CFO . A Charteredaccountant by profession, member of Company Secretary (FCS),as well as a Law Degree (LL.B). He has a rich experience over30 years in finance and global M&A activities. Mr. Jaju has beenawarded 3 times as Best Performing CFO in the year 2003, 2005and 2006, by the most credible nationally renowned jury.
Management Team
Mr. David J. Delie serves as President Welspun TubularLLC. A graduate in Science (Electrical Engineering) and aMasters Degree in Engineering Management from theUniversity of Pittsburgh, he has an extensive 33-yearbackground in the steel and pipe industry. Mr Delie has
served on the Board of Directors of Berg Steel Pipe Corp.,EB Pipe Coating, Inc., the American Iron & Steel Institute(AISI).
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4. Strong Management Team with Proven ExecutionCapabilities
LSAW Pipes ERW Pipes
HSAW PipesCoating of Pipes
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4. Strong Management Team with Proven ExecutionCapabilities
PlatesPlates
US Plant
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4. Strong Management Team with Proven ExecutionCapabilitiesUS Plant
Rationale for US Plant Opportunity to locate closer to customers who were facing supply challenges
Transportation cost becomes quite large for inter-continental shipment
Existing capacity in the US was not able to serve the requirement of US clients
State of the art facility at Little Rock, Arkansas. Commissioned in Feb-09 and has obtained all APIapprovals
Key supplier for last 5 years in US with client list that includes Chevron, Exxon Mobil (Golden PassPipeline), Kinder-Morgan and Ruby (El Paso)
Framework agreement with Chevron, making Welspun one of the three global preferred vendor fornext 3-5 years
Supplied pipes for worlds deepest pipe - line in Gulf of Mexico
In 9M FY 2011 utilization levels ramp-up to 63%
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Notes1. Excluding Other Income2. Using avg. exchange rate of US$1 = Rs.44.28 from 01-Apr-05 till 31 -Mar-06
3. Using avg. exchange rate of US$1 = Rs.43.51 from 01-Apr-06 till 31-Mar-074. Using avg. exchange rate of US$1 = Rs.40.29 from 01-Apr-07 till 31-Mar-08
10,493
3,384
1,655
6,555 6,348
13,186
0
4,000
8,000
12,000
2005-06 2006-07 2007-08 2008-09 2009-10 9M-2010-11(3) (4) (7)(5)(2)
37 78
5. Exponential Growth in Revenues & Margins
371
501
641695
814
640
154
356387
50
250
450
650
850
2005-06 2006-07 2007-08 2008-09 2009-10 9M -2010-11
(000 MT) (INR MM)CAGR (06-10): 22%
(INR MM)
5,150
1,425
614
3,408
2,135
6,104
0
1,500
3,000
4,500
6,000
2005-06 2006-07 2007-08 2008-09 2009-10 9M-2010-110.0%
4.0%
8.0%
12.0%
16.0%
PAT Margin (%)(INR MM)CAGR (06-10): 68% CAGR (06-10): 78%
163 138US$ MM
Sales (volume) Consolidated Revenues (1)
EBITDA (1) Profit After Tax
1,250US$ MM 991413(2) 617 (3)
(4) (5)
Notes5. Using avg. exchange rate of US$1 = Rs.45.91 from 01-Apr-08 till 31 -Mar-096. Includes extraordinary items : forex provisioning of INR1,256MM, Inventory write-down of INR 385MM,
ECB provisions of INR 178MM7. Using avg. exchange rate of US$1 = Rs.44.90 from 01-Apr-09 till 31 -Mar-108. Includes recovery of past forex provisioning ( in FY09) , which is reflected in better realization and cost of material9. Exchange rate of US$1 = Rs.44..705 as at 31-Dec-10
(3) (4) (5)(2)14 33 85 47
1,637(7)
294 136 (7)
18,29826,834
39,945
57,395
73,503
58,604
0
25,000
50,000
75,000
100,000
2005-06 2006-07 2007-08 2008-09 2009-10 9M-2010-11
CAGR (05-10): 42%
(8)
# Plates
(#)(#)
(#)
(9)1311
235(9)
115(9)
US$ MM
(6)
(6)
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4.28.7
18.3
11.5
28.423.3
0
7
14
21
28
35
2005-06 2006-07 2007-08 2008-09 2009-10 9M-2010-11
CAGR (06-10): 61%
14.7%
19.5%
11.4%
17.3%19.1%
12.2%
21.8% 21.7%
13.7%
21.0%
0%
5%
10%
15%
20%
25%
2005-06 2006-07 2007-08 2008-09 2009-10
R OC E R OE
5. Exponential Growth in Revenues & Margins
EPS (Rs./Share)(Diluted)
ROCE and ROE (%)
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5. Exponential Growth in Revenues & Margins
Consolidated Balance Sheet (Rs. Mn.) FY2009 FY2010 ChangeSources of FundsShareholders' Funds
Share Capital 932 1,022 89 Reserves and Surplus 14,664 27,990 13,325
15,597 29,011 13,414
Minority Interest 0 0 (0) Foreign Currency Monetary Item Translation Difference A/c - 75 75 Loan Funds -
Secured Loans 26,435 18,654 (7,780) Unsecured Loans 103 6,822 6,718
26,538 25,476 (1,062) Deferred Tax Liabilities (Net) 2,488 3,352 865
Total 44,623 57,915 13,292
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5. Exponential Growth in Revenues & Margins
Consolidated Balance Sheet (Rs. Mn.) FY2009 FY2010 ChangeApplication Of FundsFixed Assets
Gross Block 34,844 38,810 3,966 Less:Depreciation/Amortisation/Impairment 3,847 5,889 2,042 Net Block 30,996 32,921 1,924
Capital Work-In-Progress 5,808 5,412 (396) 36,804 38,333 1,529
Investments 1,140 1,596 456
Foreign Currency Monetary Item Translation Difference A/c 355 - (355) Current Assets, Loans and Advances - Income Accrued on Investments 113 13 (99) Inventories 26,113 20,322 (5,791) Sundry Debtors 4,601 8,077 3,476 Cash and Bank Balances 9,470 17,028 7,558 Loans and Advances 5,552 6,031 479
45,848 51,471 5,623
Less : Current Liabilities and Provisions - Current Liabilities 38,955 32,291 (6,663) Provisions 601 1,219 618
39,555 33,510 (6,045) Net Current Assets 6,293 17,961 11,668
Preliminary Expenses 0 0 (0) Deferred Revenue Expenditure 31 25 (5)
Total 44,623 57,915 13,292
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May 2011 Page 22
Consolidated Balance Sheet as on 30 th Sept 2010
ParticularsH1 FY 2011
As at 30.09.2010
Unaudited (Rs. Mn)A Sources of Funds1 Shareholders Fund
a Share Capital 1,023b Reserves and Surplus 31,470c Share Application Money -d Minority Interest 1,548
2 Loan Funds 38,9133 Foreign Currency Monetory Item Translation Difference Account 384 Deferred Tax Liabilities-Net 3,761
Total 76,753B Application of Funds1 Fixed Assets 40,2962 Build Operate and Transfer Projects Expenditure 4,1593 Investments 13,0654 Foreign Currency Monetory Item Translation Difference Account5 Current Assets, Loans and Advances
a Inventories 19,002b Sundry Debtors 12,998c Cash and Bank Balances 13,132d Loans and Advances 4,964
Less4 Current Liabilities and Provisions
a Current Liabilities 29,404b Provisions 1,482
5 Miscellaneous Expenditure 25Total 76,753
Breakdown of Production and Sales in Metric Tonnes (MT)
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May 2011 Page 23
9M & Q3 FY 2010-11 Highlights
Summary of 9M & Q3 FY11 (Rs. Million)
Breakdown of Production and Sales in MT
Major Highlights in 9M FY11
Sales strengthened by volume growth and consolidationof Infra business and is up by 2%
Interest costs lower by 42%, due to repayment of high
cost debt Depreciation is higher by 17%, due to capitalization ofnew capacities and consolidation of Infra business
PAT at Rs. 5,150 million reflects the growth of 16% on aYoY basis
Net Debt of Rs 11,120 million and Net Debt Equity Ratioof 33%
Status of ProjectsCapacity of Pipes is being increased to 2.2 million MTPA:
LSAW expansion of 350 K MTPA at Anjar in Q1 FY 2012. HSAW plant of 100K MTPA at Karnataka is now fully
operational. Saudi Plant commences production in Q4 FY11
New Initiatives The company successfully completed the investment in
the Saudi plant, which has commenced production in Q4FY11
Implementation of L-SAW plant at Anjar is on schedule,and is likely to be commissioned by the end of Q1 FY12
The Mandya plant in Karnataka has started productionand is ramping up to achieve desired level of production.
Welspun Middle East is establishing its presence inDubai to cater to the bouyant markets of Middle East andAfrica.
Particulars Q3 FY11 Q3 FY10 Growth%9M
FY119M
FY10Growth
%Sales 15,862 16,395 -3% 58,604 57,528 2%Reported EBITDA* 3,154 3,561* -11% 10,493 10,336* 2%
Interest 454 428 6% 1,046 1,790 -42%Depreciation 653 511 28% 1,808 1,541 17%PAT 1,465 1,668 -12% 5,150 4,439 16%Cash PAT 2,297 2,300 7,481 6,191 21%EPS (Rs./Share) -Diluted 6.65 7.83 -15% 23.26 20.91 11%
Reported EBITDAMargin (%) 19.9% 21.7% 17.9% 18.0%
PAT Margin (%) 9.2% 10.2% 8.8% 7.7%
Production Volume (intons) Q3 FY11 Q3 FY10 Change 9M FY11 9M FY10 Change
Total Pipes Consolidated 211,787 156,679 35% 719,613 613,544 17%
Plates & Coils 144,279 93,586 54% 372,635 276,749 35%
Sales Volume (in tons) Q3 FY11 Q3 FY10 Change 9M FY11 9M FY10 Change
Total Pipes Consolidated # 163,611 170,216 -4% 639,862 610,319 5%
Plates & Coils* 124,511 112,329 11% 355,937 288,279 23%
( )
*Reported EBITDA and Profits for the quarter and nine months period ended 31st December 2009 i ncludes Foreign Exchange realig nment gain of Rs 590 milli onand Rs 1,260 million.
# Company recorded higher inventory of pipes in Q3 FY11due to delay in shipment of certain export orders. The above inventory of finished pipes is beingdispatched in Q4 FY11 ensuring that the company achieves its annual sales target and records its highest ever sales in FY11.* Includes Internal Sales
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May 2011 Page 24
Summary
2Robust BusinessFundamentals& Healthy Order Book
Strong volume growth Order Book in excess of US$
1.5 Bn Capacities of global size Comprehensive product mix
Strong Management Teamwith Proven ExecutionCapabilities
Recognized by the FT as thesecond largest steel pipeproducer in the world in 2007
First Indian company to supplypipes for offshore projects in US
4 3 Global Footprint & PreApproved with O&G Majors
Presence across more than 25countries
Pre-approved with more than50 O&G Majors
1 Strong IndustryFundamentals
Capital intensive, highbarriers to entry
North America expected tolead demand
5 Exponential Growth inRevenues & Margins
Revenues have grown at aCAGR of 42% over the lastfive years
PAT has grown at a CAGR of78% in the same period
1 Strong IndustryFundamentals
Capital intensive, highbarriers to entry
North America expected tolead demand
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May 2011 Page 25
Welspun on the Path of Global Leadership
Scale of operations through large economic plants across the globeScale Leadership
Adopt and innovate cutting-edge technology to satisfy stringentrequirements of customers
TechnologyLeadership
Produce world class products at the least cost and maintain competitive edgeCost Leadership
Consistent focus on quality at all levels; be the best in delighting customersQuality Leadership
Most efficient and effective processes to achieve optimal utilizationsProcess Leadership
Best in class people : Produce extraordinary resultsPeople Leadership
Global Leadership Serve Globally, Act Locally
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May 2011 Page 26
Key questions on recent updates
What is Welspun's exposure to current civil proceedings?
During the previous year one of the customer reported defect in the pipes suppliedalleging grade of steel used did not meet the specifications, the company replaced thedefective pipes and also provided for the expected loss on this account. During the year
the said customer initiated legal action against the company in the United States ofAmerica claiming loss / damages of $ 66 million on account of defects in the pipessupplied, consequently the company also initiated legal action against the steel supplierclaiming corresponding loss / damages it may suffer on account of this claim of thecustomer. Hence the company does not expect any liability on account of the claimagainst it.
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Thank You
For further details, please contact:
Navin Agarwal
AVP - Corporate Affairs
Email: [email protected]
Akhil Jindal
Director - Corporate Affairs
Email: [email protected]
Company Website: http://www.welspuncorp.com