welspun corp ltd meet/132144_20140429.pdf · 2014-05-14 · welspun group | welspun corp ltd...

Welspun Group | Welspun Corp Ltd

WCL - Investor & Analyst meet 2014 29 April 2014


Disclaimer

Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking

statements,” including those relating to general business plans and strategy of Welspun Corp. Limited (“WCL"), its future outlook and

growth prospects, 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 securities 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 securities. Neither this presentation nor any other documentation or information (or any part thereof) delivered

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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 presentation, the information contained herein is

based on management information and estimates. The information contained herein is subject to change without notice and past

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This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.

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Japan.


Agenda

FY14 SCORE CARD

BUSINESS OUTLOOK

ANALYSIS OF MAJOR MARKETS

ROAD AHEAD


FY14 SCORE CARD

BUSINESS OUTLOOK


ROAD AHEAD


0

200

400

600

800

1,000

1,200

FY 10 FY 11 FY 12 FY 13 FY 14

816909

835

1,018 1,019

In '0

00 M

T

Total Pipe Sales

5

Sales volume - At an all-time high

1, 019 K tons - Highest annual Sales

Breaks the ‘Million ton’ barrier for the second year in a row


-

200

400

600

800

1,000

1,200

FY 10 FY 11 FY 12 FY 13 FY 14

814

958819

1,010 1,022

In '0

00

MT

Total Pipe Production

6

Production Volume - At an all-time high

1,022 K tons - All time high annual production

Breaks the ‘Million ton’ barrier for the second year in a row


Financial highlights for FY14

Results maintained in spite of challenging environment

Notes:

a) Operational EBITDA = Reported EBITDA – Non-operational income + Unrealised Forex loss/(gain)

b) Cash PAT = PBT – Current tax + Depreciation + Post-tax Unrealised Forex loss provision/(gain)

* Adjusted for Unrealised Foreign Exchange loss of Rs.1,046 mn in FY14 and gain of Rs. 232 mn in FY13

Equity dividend of Rs. 0.5/share declared; track record of dividend payments over

the last six years

Particulars FY13 FY14

Net sales 90,831 77,047

Operational EBITDA* 7,079 7,742

Reported EBITDA 9,191 8,439

PBT before exceptional 2,076 1,412

PAT after Minority 1,404 734

Cash PAT* 5,635 5,768

(Rs. In Million)


Net debt/equity at a comfortable level

Increase in Net worth is on account of preference capital issued by US subsidiary

Net debt/equity comfortable at 0.84x

Debt increase mainly on account of higher working capital

Particulars FY13 FY14

Share capital 1,315 1,315

Net worth 27,556 29,569

Gross debt 38,907 37,411

Cash and cash eqv. 15,737 12,590

Net debt 23,170 24,821

(Rs. In Million)


Working capital

Better inventory management and strong execution results in lower inventory days

Payable days lower due to reduction in acceptances

Days of sales FY13 FY14

Inventory 93 61

Receivables 62 30

Other current assets 23 23

Current assets 178 114

Trade payables 99 29

Other current liabilities 67 35

Current Liabilities 166 64

Cash conversion cycle 12 51


FY14 SCORE CARD

BUSINESS OUTLOOK


ROAD AHEAD


11

Key Business Highlights

Source – Welspun

Successfully completed Demerger of Welspun Corp Ltd

Achieved 1 Mn plus tons sales and production tonnage milestone – second year in a row despite

challenging business environment

HFIW plant put into commercial production at Little Rock and achieved stabilization in Q4-FY14

Orders/Approvals from reputed clients

DJ plant commissioned in Saudi Arabia; Internal & External Coating Plant commissioned in Anjar,

India

New marketing office in Dubai for greater focus on EMEA (Europe- Middle East- Africa) customers

Other Milestones

Single Largest Order from Saudi Arabia

Supply of niche product – 128” x 18 mm extra large dia pipe


12

Order book highlights – Strong visibility for next year

Booked orders in excess of 1,260 K MT in FY14

Closing Order Book of 901 K MT of pipes as on 1st April 2014 (vs. 657 K Mt as on 1st April

2013)

Pipe Order book in K MT

Pipe Orders Booked Pipe Orders Executed Closing Pipe Orders

Year MT (in '000 tons) MT (in '000 tons) MT (in '000 tons)

FY 2008-09 807 695 781

FY 2009-10 824 814 791

FY 2010-11 844 909 726

FY 2011-12 762 835 653

FY 2012-13 1,022 1,018 657

FY 2013-14 1,261 1,019 901


13

Current Order book details

Americas , 16%

MENA, 55%

India, 28%

Geographical Distribution

LSAW, 32%

HSAW, 62%

ERW, 6%

Product Wise

Welspun has begun FY15 with a strong order book (order book value at approx Rs. 58 Bn)

Welspun has currently active bids of 3.5 million MT


FY14 SCORE CARD

BUSINESS OUTLOOK


ROAD AHEAD


North America – Resurgence in demand likely!

• Oil production is expected to rise over the next decade leading to a reduction in net import dependence in the USA. (Source: EIA)

• The United States is set to become a net exporter of natural gas by 2020 (source: EIA)

• Rise in Gas production drop in the gas prices export of gas from USA, an attractive proposition in the future

USA

• Due to gas production boom in US, export of gas from Canada into US is not likely to remain a feasible option

• Hence there is an urgent imperative for Canada to develop new markets

• Canada contemplating transport of oil to the refineries in eastern Canada which are currently dependent on imported oil

Canada

• Mexico’s oil industry witnessed a landmark event in 2013, ending 75 years of the PEMEX monopoly and opening up unexplored areas for development by foreign E&P firms (Source: DW report)

• PEMEX to invest $28bn in 2014 (Source: Upstream)

• CFE plans to setup another 19,000 MW of Gas based power plants which would need onshore pipelines

Mexico


Marcellus shale play, Ohio, PA, NY, W. Virginia

North America –Natural Gas Map

16

Major Current Active Shale Plays

Existing Gas Pipelines

Existing LNG import terminals

Montney, BC, AB

Bakken, North Dacota, AB,

Saskatchewan

Mancos, Idaho, Utah, Wyoming

Monterey, CA

Avalon, TX

Barnett, TX

Eagle Ford, TX

There is a vast unexplored shale potential and

most import LNG terminals in USA shall be

converted to export which would need further

pipeline infrastructure to interconnect

various shale plays and further connect them

to refineries and/or to export terminals

Upcoming LNG export terminals in Canada


Canada Oil and Gas Map

Oil Sands


Replacement Demand Potential in USA

18

A soaring number of pipeline incidents suggests extensive damage from operating on higher load

factors as well as the deteriorating state of a significant share of the US transmission pipeline network

This could lead to tighter standards of control along with stricter requirement for regular inspections

and higher replacement rates from pipeline operators in the future.

According to the Office of Pipeline Safety (OPS), there were 305,000 miles of transmission pipeline

in USA at the end of 2011. At a replacement rate of 0.2% pa, estimated demand will be around 600

miles pa (968km).

Majority of transmission pipeline was laid during the 1950s and 1960s and is now more than 50 years

old, this replacement rate could be significantly higher (2%).


Middle East, Africa, Europe – Continue to remain strong!!

• Saudi Arabia will continue to maintain strong demand in FY15, FY16 as it completes its Gas Master plan with large cross country East-West pipelines

• There are visible oil and gas projects in UAE, Oman, Kuwait which continue to strengthen their infrastructure for internal grid connectivity and export

• Iraq is expected to continue its steady demand for pipelines as the country is moving further on the path of stability and resurgence

Middle East

• The ultra large project South Stream will be implemented in Europe which would keep the European mills occupied

• Trans Anatolian Pipeline in Turkey will be an important pipeline in Europe as it presents as alternative to Russian Gas in Europe

Europe

• Algeria will continue its steady demand as it improves its mainland pipeline connectivity and increases supply to Algerian Shore for European export

• Mozambique will present large demand in FY15 and FY 16 as it develops its offshore fields

• Nigeria and other African states like Angola, Kenya will also present a few projects

Africa


India, APAC –Demand sluggish, Competition intensity will

be a challenge

• Oil and Gas pipeline market would be under close watch with

large cross country gas pipelines planned for FY16

• FY15 will present opportunities in water pipeline segment

India

• Thailand, Malaysia and Indonesia will be the prime countries of focus

• Vietnam and Myanmar are the new markets in this region which

have large potential oil and gas reserves

• Japanese and Chinese Competition is a big challenge in APAC

APAC


Facility

Marketing Office

Little Rock,

AR. Houston.

Delhi

Mumbai

Dammam

Dubai

Anjar, Dahej

Mandya

Global Manufacturing and Sales Footprint


360 Degree Line-pipe and Coating Solutions

Total Global Capacity - Coating

Capacity

32.05 million m2

Internal Coating

14 inch to 100 inch

(Internal Diameter)

External Coating

2 inch to 120 inch

(Outer Diameter)

Total Global Capacity 2.425 Mn MTPA

Grade up to API X120

HFW

MTPA : 0.375

OD: 1.25-20”

WT : 2-14 mm

HSAW

MTPA: 1.35

OD: 18-140”

WT: 5-27 mm

LSAW

MTPA: 0.7

OD: 16-60”

WT: 6-43 mm

Complete Product range with Hot induction bends and bends coatings which makes Welspun

a one-stop-shop and a preferred vendor for line pipe projects


China

India

Brazil

France

Japan

Korea

Germany

AMERICAS

Coil

Plate

Global Sourcing

Ukraine


FY14 SCORE CARD

BUSINESS OUTLOOK


ROAD AHEAD


Road Ahead

No additional Capex planned in FY 15 other than the regular maintenance capex.

Welspun continues to explore relocation options in key markets

Overall global pipe demand outlook for FY 15 is expected to remain slow.

Welspun, despite the market conditions, has a strong opening order book

Welspun with its global manufacturing base and global raw material sourcing capabilities is fairly placed to maintain its performance

Slow down in one region not to have a large adverse effect on Welspun as it will get compensated by high performance in another region

Outlook for FY16 and beyond is expected to improve

• Shale gas and associated LNG terminals shall be the major factor driving the demand surge, as USA and

Canada plan for LNG exports to Europe and South East Asia

• This coupled with Replacement demand is expected to lead to a scenario where potential demand may be

greater than the local competition which would lead to higher margins


On The Path of Global Leadership…

Thank You


Contacts

For further details, please contact:

Harish Venkateswaran

GM - Group Finance and Strategy

Email: [email protected]

Akhil Jindal

Director – Group Finance and Strategy

Email: [email protected]

Company Website: http://www.welspuncorp.com

welspun corp ltd meet/132144_20140429.pdf · 2014-05-14 · welspun group | welspun corp ltd...

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