Welspun Corp Limited has informed the Exchange about Investor Presentation
WCL/SEC/2022
August 4, 2022
To, BSE Ltd. Department of Listing, P. J. Towers, Dalal Street, Mumbai – 400 001.
(Scrip Code: Equity - 532144), (NCD – 948505, 960468, 960491 and 973309)
Dear Sirs/ Madam,
National Stock Exchange of India Ltd. (Symbol: WELCORP, Series EQ)
Exchange Plaza, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051.
Sub.: Business Update and Investors’ Presentation.
In continuation of our letter dated August 4, 2022, please find attached herewith the Business Update and Investors’ Presentations which is being released to the media simultaneously.
Investor Relations and Media Queries Contact: Mr. Gaurav Ajjan at
For Gaurav_Ajjan@welspun.com / +91 22 6613 5748
Kindly take note of the above.
Thanking You. Yours faithfully, For Welspun Corp Limited
Pradeep Joshi Company Secretary FCS-4959
BUSINESS UPDATE
Robust Outlook for FY23
Order Book for Line Pipes in excess of 1 Million MT
August 4, 2022, Mumbai: Welspun Corp Ltd. (WCL), a flagship Company of the Welspun Group, announced its consolidated financial results for the quarter ended June 30, 2022.
Order Book for Line Pipes in excess of 1 Million MT, active bid book of 1.9 Million MT
Preparing to execute on WCL’s largest order ever (valued at Rs. 5000+ cr) in the US
Business Growth and Diversification Strategy on track: Commissioning of state-of-the-art
Blast Furnace and Sinter plant, and TMT Bars facility
Voluntarily published the first Business Responsibility and Sustainability Report (BRSR)
as early adopters
Note: Sales Volume & Order Book includes our Saudi operations
Key Highlights of the Quarter ended June 30, 2022
-
-
Prior period figures are restated after the acquisition of the Steel business of Welspun Steel Limited
Financial Highlights (Consolidated) for Continuing Operations (Ind AS)
1. Global Order Book – Line Pipes
Current Global Order Book stands at 1,020 KMT valued at Rs. 13,350 cr
2. Sales Volumes (Q1 FY23)
Line Pipes: 157 KMT vs. 175 KMT YoY | Billets: 36 KMT vs. 45 KMT YoY
SS Bars: 1,557 MT vs. 142 MT YoY | SS Pipes 692 MT vs. 358 MT YoY
3. Revenue from Operations
Revenue from Operations for Q1 FY23 at Rs. 1,322 cr
4. EBITDA
Reported EBITDA for Q1 FY23 at Rs. 102 cr
5. Profit (Continuing Operations)
PAT (after Minorities & share of JVs) stands at Rs. 4 cr
6. Net Debt / (Cash) position
Figures in Rs. Cr
Consolidated debtJun-22Mar-22Mar-21Gross Debt 2,063 2,021 963 Cash & Cash Equivalents 2,179 2,195 1,410 Net Debt / (Cash) (116) (173) (447) BUSINESS UPDATE
7. Dividend
The Board has recommended a final dividend of Rs. 5.00 per share which is 100% of the Face Value for
FY22 and was paid after the AGM on 29 July, 2022.
We have demonstrated a strong performance track record with average sales volume of more than a million
MT in the last 5 years which has led to generation of healthy cash flows from the business. This has helped
us in deleveraging and strengthening our Balance Sheet while reinvesting for growth.
FY22 excludes Cash Flow impact of Gain of Rs.359 crores in “Other Income” from the Saudi IPO & proceeds from the Sale of the
PCMD business of Rs. 806 crores
This has enabled us to reward shareholders. We have been a consistent dividend paying company and
also did a buyback of shares in FY20.
1) Face Value = Rs. 5.00 per share 2) Interim Dividend (One-time) of Rs. 10.00 per share declared in FY20
8. Business Outlook
Oil prices have moved in a range with concerns about supply as Western sanctions on Russian crude and
fuel supplies have disrupted trade flows to refiners. On the other hand, there are rising worries that central
bank efforts to tame surging inflation may trigger a recession that would cut future fuel demand.
Spot Steel prices across the world have remained under pressure in the last few months. Recessionary
pressures, lower consumer confidence and renewed fears of a lockdown in China have led to the downward
pressure on prices. Steel Prices have dropped significantly domestically in India after the Ministry of Steel
imposed an export duty of 15% in May 2022.
The current environment of high energy prices coupled with a decline in global prices of steel augurs
extremely well for us. We are in active discussions for several export orders across the world which we
hope to win in due course of time. This comes at a strategic time as the European Union seeks to wean
itself off Russian gas following the invasion of Ukraine, and is seeking alternative sources. In addition, there
is a significant demand from South East Asia, Middle East and Africa which should create a robust order
pipeline for exports.
KMTFY18FY19FY20FY21FY22Sales Volumes - Line Pipes1,082 1,279 1,502 1,003 796 INR CrFY18FY19FY20FY21FY22Cash from Operations981623648774219INRFY18FY19FY20FY21FY22Dividend Per Share0.50.510.55.05.0Basic EPS - Consolidated (Cont. Ops)6.02.625.624.116.8Payout Ratio8%19%41%21%30% BUSINESS UPDATE
India
Gas demand prospects in India remain strong as the Government has set a target to raise the share of
natural gas in the energy mix from the current 6.7% to 15% by 2030. According to IEA, India’s total gas
consumption is projected to increase by 19% (13 bcm) during the 2021-2025 period, which is equivalent to
a 4% annual average growth rate.
The industrial sector will remain the biggest driver of growth between 2021 and 2025, accounting for about
40% of the net increase in India’s natural gas consumption. The residential and commercial and transport
sectors will make similarly strong contributions thanks to the continued expansion of the domestic gas grid.
Gas use in the power generation sector is set to decline by 14% in the 2021-2025 period as high imported
and rising domestic prices render gas-fired power uncompetitive relative to other fuels. Approximately two-
thirds of India’s incremental gas demand is set to be satisfied with growing domestic production. The
remaining one-third has to be met with imported LNG, but even after the 11% increase in LNG inflows
foreseen in 2021-2025, total LNG demand in 2025 will stay slightly below the 2020 peak as high prices
discourage greater LNG use in the years ahead.
The policy framework remains supportive for natural gas use in India, although affordability has emerged
as a major concern. The expansion of the city gas distribution grid is set to continue (and accelerate further
after the conclusion of India’s 11th bid round this year). The size of India’s gas transmission network could
increase by 75% and LNG import capacity could grow by 40% during the forecast period with the completion
of projects currently under construction. (Source: IEA - Gas Market Report Q3-2022)
We are seeing demand coming back in the Water sector which has been muted since the start of the
pandemic. With a cooling off in steel prices, projects that were put on hold are now being proposed to be
completed. There is increased traction across States like Gujarat, Maharashtra, Tamil Nadu, Karnataka,
Madhya Pradesh, Punjab and Rajasthan.
There is a strong intent to meet the ambitious targets as envisaged in various Government schemes. The
focus by both the Central and State Governments on developing water infrastructure is expected to drive
the demand for large diameter HSAW pipes and DI Pipes.
USA
U.S. pipeline operators are expected to have benefited from high oil and gas prices and rising domestic
production in the second quarter of 2022. Natural gas projects are expected to be the mainstay of growth
in coming years as production rises. There is increased demand for exports to new customers in Europe,
which is trying to diversify away from Russian energy, and in Asia, where many countries are boosting
imports of LNG. EIA estimates that U.S. LNG exports averaged 11.2 billion cubic feet per day (Bcf/d) in
1H22, compared with 9.5 Bcf/d in the same period in 2021. It expects LNG exports to average 10.9 Bcf/d
in 2022 and 12.7 Bcf/d in 2023.
BUSINESS UPDATE
After years of under-investment the US is focused on boosting oil and gas supply within the country. The
number of active oil and natural gas drilling rigs in the United States rose by 272, or 56%, in the past year
to the highest point since March 2020.
Date of Last Year’s Count
16 July 2021
Count
Last Count
Count
Change from Last Year
484
15 July 2022
756
+272
Source: Baker Hughes
We recently announced winning of the single largest order in our history for supply of pipes valued at Rs.
5000 + crores (approx) in the US. This order is for supply of 325,000 MT (approx) of large diameter coated
pipes for transporting natural gas from the Permian Basin to Houston. The pipes for this order will be
produced from our Little Rock plant in the US and the same will be executed over a period of 12 months,
commencing H2 of FY23. This large new order from the US comes on the back of another win we had
announced in April 2022, of a 26,000 MT order from a long-standing customer in North America.
Saudi Arabia
Saudi Arabia intends to invest in fossil-fuels production over the next two decades to meet growing global
demand and avoid energy shortages. Saudi Aramco aims to boost its capex to US$40 billion-US$50 billion
in 2022, with further growth expected until around the middle of the decade. It plans to raise crude oil
"maximum sustainable capacity" to 13 million barrels a day by 2027, and wants to boost gas production by
more than 50% by 2030.
With surging oil prices, we are confident that opportunities will arise, both in the Oil & Gas and the Water
segment.
In July 2022, our associate company, East Pipes Integrated Company for Industry (EPIC) in the Kingdom
of Saudi Arabia (KSA), was awarded with a contract by SWCC for manufacture and supply of steel pipes.
The contract was valued at SAR 324 million (approximately) and the same will be executed in this financial
year. This is in addition to the recent award of an SAR 490 million contract in May 2022 and SAR 497 million
contract in March 2022, both of which were also awarded by SWCC.
9. Long Steel Products
Infrastructure investment is witnessing a renewed impetus from the government as India aims to achieve a
US $5 trillion economy. A series of structural reforms have been announced that have set the foundation
for economic growth on the back of infrastructure development. One such reform taken last year, was the
launch of the PM Gati Shakti National Master Plan. The Rs. 100 lakh crore mega plan was launched with
a digital platform to bring 16 ministries together for integrated planning and implementation of projects.
BUSINESS UPDATE
Under the Pradhan Mantri Awas Yojana-Urban's (PMAY-U) 'Housing for All' mission, central assistance
has been provided to states and Union Territories (UTs) since 2015 for giving all-weather “pucca” houses
to eligible urban beneficiaries including homeless people. Based on project proposals submitted by states
and UT’s a total of 1.22 crore houses have been sanctioned till 31 March, 2022 of which around 41 lakh
houses have been sanctioned in the last two years.
Overall, the focus on development is visible and the demand for Long Steel Products will be supported by
increased spending on infrastructure and construction.
10. Welspun Specialty Solutions Limited (WSSL)
Stainless Steel Bars volumes were higher by 997% (SMS started during Q3 FY22) and Pipe volumes
higher by 93% for Q1 FY23, both compared to the corresponding period in the previous year.
Particulars
Q1 FY23
Q4 FY22
Q1 FY22
FY22
Stainless Steel Bars (MT)
Pipes (MT)
1557
692
1248
1160
142
358
1531
2915
BIS standard for Seamless tubes & pipes (BIS 17875) has been introduced which is favourable for
WSSL. The company has already initiated the process to obtain the accreditation.
WSSL received its first order from an Oil & Gas sector PSU for Monel 400 Grade tubes. The company
also delivered its first order of High Pressure Heater tubes in Grade 304N “U” Tubes.
Overall, WSSL expects its improved performance to sustain on the back of several new customer
approvals and accreditations.
11. Merger Update - Acquisition of Steel business of Welspun Steel Limited
The transaction was completed on 16 March, 2022 with the Appointed Date of April 1, 2021. In line with the
accounting standards, all prior figures including for the year ended March 31, 2021 have been restated after
consolidation of the demerged steel undertaking of WSL and WSSL.
12. Update on Ductile Iron Pipe & TMT Bars Projects
The commissioning of the state-of-the-art Blast Furnace and Sinter plant, and TMT Bars manufacturing
facility at Anjar, Gujarat was completed in July 2022.
The Blast Furnace can produce approximately 500,000 MT of Hot Metal per annum which will primarily be
used for manufacturing Pig Iron and Ductile Iron (DI) Pipes. The trial production for DI pipes has also started
and the facility has recently received BIS certification. This integrated complex is equipped with the latest
BUSINESS UPDATE
cutting-edge technology, and will include Blast Furnace, Sinter Plant, PCI & Oxygen Plant, Coke Oven,
besides a 400,000 MT per annum capacity DI pipe plant.
The TMT bar manufacturing facility has a capacity of 350,000 MT per annum. We have an existing
manufacturing set-up of BIS Certified Steel Billets and Direct Reduced Iron which will be used as inputs for
the manufacture of TMT bars.
13. Acquisition of Sintex BAPL Ltd.’s Non-Convertible Debentures
WCL’s growth strategy entails creating a diversified product portfolio, repurposing its business to add new
target segments, expanding its offerings to address both the B2B and B2C markets, and making well-
considered strategic acquisitions. In this regard, we have acquired Sintex BAPL Ltd.’s Non-Convertible
Debentures with outstanding of Rs. 1,222 Crore for a purchase price of Rs. 418 Crore (as on date) by our
wholly-owned subsidiary viz. Mahatva Plastic Products And Building Materials Private Limited.
14. Future Performance Drivers
A) Hydrogen Gas Transportation and Clean Fuel Transition
As energy demands across the world evolve rapidly, we are undertaking strategic interventions in new
opportunities and segments.
We have joined a global H2Pipe Joint Industry Project (JIP) on the Design and Operation of Hydrogen
Pipelines launched by leading industrial certification body DNV AS Energy Systems Pipeline Technology.
We are helping to develop a recommended practice for design, re-qualification, construction and operation
of pipelines for hydrogen gas transportation in offshore pipelines and complement existing standards such
as DNVGL ST F101 (submarine pipeline systems). This industry-first project will provide guidance to the
global energy sector as it shifts towards clean energy using alternative sources, with Hydrogen emerging
as an important pillar for energy transition.
As a Steering Committee Member, we are collaborating with 24 of the world’s premier energy companies,
to provide technical expertise in the project aimed at laying the foundation of hydrogen infrastructure. The
H2Pipe project is being executed in multiple phases. The first phase will focus on the assessment of existing
standards, including the offshore standard DNVGL-ST-F101, to identify the scope and additional
considerations for hydrogen transportation. This will be captured in an industry guideline and will include
preliminary experimental activities. The subsequent phases will be experimental to define the requirements
and acceptance criteria for offshore hydrogen pipelines.
We have also signed an MOU with Tata Steel to develop the framework for and subsequently manufacturing
pipes for transportation of pure hydrogen and natural gas-blended hydrogen. The green energy strategic
partnership is to assess the suitability of a variety of pipes manufactured by us for the transportation of
Hydrogen.
BUSINESS UPDATE
Other focus areas for us to support the clean energy transition include:
Carbon Capture & Emission Reduction Technologies
Green Steel with Lowest Carbon Footprint Possible
Investment in Renewables to meet Carbon Reduction Targets
B) DI Pipes
The Jal Shakti Ministry was allocated a total of Rs. 86,189 crore for FY23 higher from Rs. 69,052 crore
allocated in the previous fiscal year. Our internal forecasts based on interactions with various industry
participants, indicate a robust demand for DI pipes over the next 5-7 years with projected demand
outstripping supply. We currently estimate prospective bids of around 2.3 million metric tonnes for DI Pipes.
C) Stainless Steel Tubes & Pipes
There is a big push for localization of these products under Atmanirbhar Bharat initiatives. Implementation
of quality order and mandatory BIS certification in India will act as major catalysts for the growth of this
sector. The Key Sectors are Power, Nuclear & Defence from where we see a significant demand pull.
D) TMT Bars
There is a demand uptick stemming from the Government’s thrust on infrastructure, particularly in the rural
markets, apart from a pickup in construction activity. This will lead to an increased offtake of Long Products.
The government has a fixed objective of increasing rural consumption of steel from the current 19.6 kg/per
capita to 38 kg/per capita by 2030-31
E) Polymers
India’s per capita consumption of polymers stands at 11 kgs, which is one tenth of that of the United States
and less than a third of that of China. There has been a rapid rise in polymer consumption in India in the
last few years. It is estimated that India’s polymer consumption will continue its growth momentum and
record a CAGR of 8 percent. Consumption is expected to double till 2030 and thereafter quadruple from
the current level between 2030 and 2040.
Sintex is a National Brand with more than 10% market share (year: 2018) in India. It has three major lines
of businesses:
Plastic Products - Water Tanks, Interiors & Institutional Products
Indian Custom Moulding - Automobile Plastic Moulded Parts
BR Rototech - Fuel Tanks for Autos
Before getting into financial stress, Sintex BAPL achieved a turnover of ~ Rs. 1,700 Crore in FY '19 with an
EBITDA of ~ Rs. 270 Crore (16.1% Margin).
BUSINESS UPDATE
The diversification into the B2C segment will help WCL to significantly expand its base, enhance its brand,
penetrate new markets, build a distribution network and provide opportunities to develop new products.
Sintex BAPL is popular for Water Storage Tanks, which have a strong brand connect with consumers. It
has a wide sales and distribution network of approximately 900 Distributors and 13,000 Retailers. There
are potential synergies for leveraging this extensive Distribution Platform for products within the group. In
addition, the distribution reach can help us incubate and launch new products and establish a new Building
Materials vertical in WCL.
15. ESG Initiatives
SEBI has stated that with effect from the financial year 2022-2023, filing of BRSR shall be mandatory for
the top 1,000 listed companies (by market capitalization) and shall replace the existing Business
Responsibility Report (BRR). Filing of BRSR is voluntary for the financial year 2021-22. As a proactive
measure, we have mapped ESG information with the requirements of BRSR.
In the coming years, our strategic focus would be to undertake action and allocate adequate resources to achieve our ESG goals in alignment with associated business goals. Some of the priorities for us are:
Energy-efficiency measures, prioritizing renewable energy strategies
Effects on the wellbeing and prosperity of employees and stakeholders
Monitoring targets and communicate to stakeholders on a timely basis while prioritizing our
Environment and Social goals
Sustainable supply chain program
Highest level of transparency and disclosures
We have a holistic long term vision aligned with our business, social and environmental objectives aimed
at establishing a healthy ecosystem of economic growth and societal value creation. As we move into the
future, ESG will be the cornerstone of our financial success, competitive advantage, and future
accomplishments.
BUSINESS UPDATE
Management Comments
“I am very proud of the team who have delivered the Steel Complex and our TMT bar facility. They stayed on course with their purpose and delivered these world class facilities despite multiple external challenges.
We are keen to contribute to India’s growth story and these newly commissioned plants will further
strengthen our efforts in developing our nation’s infrastructure and improving the lives of people across the
country. Also, our focus on future needs like Hydrogen, Carbon Capture, Green Steel and Renewable
Energy is going to set the tone for future growth, and at the same time, help in meeting our ESG &
Sustainability Goals” said Mr. B. K. Goenka, Chairman, Welspun Group.
“Our order backlog in the line pipes business is once again more than a million metric tonnes. This
demonstrates our deep customer connect and flawless track record of execution. With our manufacturing
presence in key demand centers across the world, and Business Growth and Diversification plans on track,
I am confident of a bright future ahead,” he added.
BUSINESS UPDATE
Consolidated Performance Snapshot
Figures in Rs. Cr
Prior period figures have been restated, wherever necessary
Saudi Financials
Key figures of East Pipes Integrated Company for Industry (EPIC):
Figures in SAR Mn
Prior period figures have been restated, wherever necessary
Sales Volumes Q1FY23 Q4FY22 Q1FY22 FY22 Line Pipes (KMT) 157 269 175 796 Billets (KMT) 36 18 45 112 SS Bars (MT) 1,557 1,248 142 1,531 SS Pipes (MT) 692 1,160 358 2,915 Consolidated Profit & Loss Account Q1FY23 Q4FY22 Q1FY22 FY22 Continuing OperationsTotal Revenue from Operations 1,322 2,011 1,510 6,505 Other Income 73 402 37 551 Reported EBITDA 102 474 207 1,023 Depreciation and Amortisation 61 63 64 255 Finance Cost 31 30 22 102 Profit before tax and share of JVs 10 380 121 666 Share of profit/(loss) from Associates and JVs 4 13 3 (6)Tax expense 14 130 37 216 Non-controlling interest (5) 27 (8) 5 PAT after Minorities, Associates & JVs 4 236 94 439 Basic EPS from Continuing Operations 0.2 9.0 3.6 16.8 Particulars in SAR MN Q1FY23 Q4FY22 Q1FY22 Saudi Arabia Ops:Sales / Revenue 206 194 149 Gross Profit 19 22 11 Operational Profit 12 15 9 Net Profit after Zakat and Tax 6 14 2 Total Comprehensive Income 6 15 2 BUSINESS UPDATE
Q1 FY23 Investor & Analyst conference call: Friday, 5th August 2022 | Time: 10:00 AM IST
Primary Access: +91 22 6280 1325 / +91 22 7115 8226
International Toll-Free numbers
o Hong Kong: 800 964 448
o Singapore: 800 1012 045
o UK: 0808 101 1573
o USA: 1866 746 2133
About Welspun Corp Ltd. (WCL)
Welspun Corp Ltd. (WCL), a flagship company of the global conglomerate 'Welspun Group', is one of India's fastest-
growing multinationals with a leadership position in line pipes, home textiles, infrastructure, warehousing, retail,
advanced textiles, and flooring solutions.
WCL is a one-stop service provider offering end-to-end pipe solutions ranging from 1½ inches to 143 inches. The
company’s ever-expanding goals and targets have helped them reach out to several parts of the world - six continents
and fifty countries - where they’ve successfully supplied pipes to numerous critical projects globally, both for offshore
and onshore applications.
Welspun Corp Ltd. is synonymous with great quality and an impeccable execution track record, coupled with world-
class technology and innovation. Their line pipe capabilities encompass HFW (High-Frequency Welded), HFIW (High-
Frequency Induction Welded), HSAW (Horizontal Submerged Arc Welded), and LSAW (Longitudinal Submerged Arc
Welded). The company also manufactures BIS Certified Steel Billets, Direct Reduced Iron, Stainless-Steel Pipes, Tubes
& Bars.
Additionally, they have forayed into the production of Pig Iron & the manufacture of DI Pipes, catering to growing water
infrastructure requirements. WCL’s growth strategy entails creating a diversified product portfolio, repurposing its
business to add new target segments, expanding its offerings to address both the B2B and B2C markets, and making
well-considered strategic acquisitions.
The diversification into the B2C segment will help the Company to significantly expand its base, enhance its brand,
penetrate new markets, build a distribution network, and provide opportunities to develop new products. In this pursuit,
WCL has also announced the commencement of its TMT facility, thereby taking the company's portfolio from being a
large-scale B2B business to a B2C business in the next few months. WCL is also foraying into polymer/plastic business
segment, which is another step towards creating a strong B2C organization in line with the overall strategy.
___________________________________________________________________________________
For further information please visit www.welspuncorp.com ___________________________________________________________________________________
DISCLAIMER: The information in this release has been included in good faith and is for general purposes only. It should not be relied upon for any specific purpose and no representation or warranty is given as regards to its accuracy or completeness. No information in this release shall constitute an invitation to invest in Welspun Corp Ltd. or any of its affiliates. Neither Welspun Corp Ltd., nor their affiliates' officers, employees or agents shall be liable for any loss, damage or expense arising out of any action taken on the basis of this release, including, without limitation, any loss of profit, indirect, incidental or consequential loss.
Welspun Corp Limited Investor Presentation | Q1 FY23
Disclaimer
For any financial disclosures, the information contained herein is provided by Welspun Corp Limited (the “Company”), although care has been taken to ensure that the information in this presentation is accurate, and that the opinions expressed are fair and reasonable, the information is subject to change without notice, its accuracy, fairness or completeness is not guaranteed and has not been independently verified unless specifically provided and no express or implied warranty is made thereto. You must make your own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as you may consider necessary or appropriate for such purpose. Neither the Company nor any of its directors assume any responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information or opinions contained herein. By preparing this presentation, none of the Company, its management, and their respective advisers undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. This document is for informational purposes and does not constitute or form part of a prospectus, a statement in lieu of a prospectus, an offering circular, offering memorandum, an advertisement, and should not be construed as an offer to sell or issue or the solicitation of an offer or an offer document to buy or acquire or sell securities of the Company or any of its subsidiaries or affiliates under the Companies Act, 2013, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, both as amended, or any applicable law in India or as an inducement to enter into investment activity. No part of this document should be considered as a recommendation that any investor should subscribe to or purchase securities of the Company or any of its subsidiaries or affiliates and should not form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not financial, legal, tax, investment or other product advice.
With respect to any ESG related disclosures, the information contained in our disclosures, statements or reports are specific to the Company and not audited or confirmed to be compliant with any general or standard benchmark. A number of statements in such disclosure or statements may contain forward-looking statements including statements about the Company’s strategic priorities, financial goals and aspirations, organic growth, performance, organizational quality and efficiency, investments, capabilities, resiliency, sustainable growth and Company management, as well as the Company’s overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives.
With respect to all disclosures provided herein, the statements contained herein may be pertaining to future expectations and other forward-looking statements which involve risks and uncertainties that are subject to change based on various important factors (some of which are beyond the Company’s control). These statements include descriptions regarding the intent, belief or current expectations of the Company or its officers including with respect to the consolidated results of operations and financial condition, and future events and plans of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “future,” “potentially,” “outlook” or words of similar meaning. Such forward-looking statements are not guarantees of future performance and actual results, performances or events may differ from those in the forward-looking statements as a result of various factors and assumptions. You are cautioned not to place undue reliance on these forward looking statements, which are based on the current view of the management of the Company on future events. No assurance can be given that future events will occur, or that assumptions are correct. The Company does not assume any responsibility to amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise.
Reproduction, distribution, republication and retransmission of material contained herein is prohibited without the prior consent of the Company
Investor Presentation
2
Q1 FY23 at a Glance
Pipes
Other Verticals
Production (Line Pipes)
Sales (Line Pipes)
Sales (Billets)
Sales (SS Pipes)
158 KMT
157 KMT
36 KMT
692 MT
Order Book (Line Pipes)
1,020 KMT
Active Bids – Outlook (Line Pipes) 1,930 KMT
Sales (SS Bars)
1,557 MT
Note: Pipe Sales & Production volumes and Order Book include Saudi
Arabia operations
Investor Presentation
3
Financial Results for Q1 FY23
Q4FY22 includes Gain of Rs.359 crores in “Other Income” from the Saudi IPO
Note: • •
Consolidated Financials pertaining to continuing operations Prior period figures are restated wherever necessary
Investor Presentation
4
Particulars (Rs Cr)Q1FY23Q4FY22QoQQ1FY22YoYTotal Revenue from Operations 1,322 2,011 -34.3% 1,510 -12.5%Other Income 73 402 -81.9% 37 96.0%Reported EBITDA 102 474 -78.6% 207 -50.8%Depreciation and Amortisation 61 63 -3.4% 64 -3.9%Finance Cost 31 30 2.1% 22 40.6%Profit before tax and share of JVs 10 380 -97.4% 121 -92.0%Share of profit/(loss) from Associates and JVs 4 13 -72.4% 3 43.2%Tax expense 14 130 -89.0% 37 -61.4%Non-controlling interest (5) 27 -118.5% (8)-33.7%PAT after Minorities, Associates & JVs 4 236 -98.3% 94 -95.6%Basic EPS from Continuing Operations 0.2 9.0 -98.3% 3.6 -95.6% Financial Performance
Consistent Performance has resulted in a Strong Balance Sheet
Note: • • •
Consolidated Financials Prior period figures are restated wherever necessary; All numbers of this sheet are based on IND-AS disclosures From FY19 figures are pertaining to continuing operations only
Investor Presentation
5
ParticularsFY13FY14FY15FY16FY17FY18FY19FY20FY21FY22Q1FY23Revenue (INR cr)9,083 7,705 8,451 7,380 6,035 7,587 8,954 9,957 7,153 6,505 1,322 EBITDA (INR cr)919 844 951 891 737 815 708 1,276 1,152 1,023 102 Basic EPS6.1 2.8 2.6 5.8 1.0 6.0 2.6 25.6 29.8 16.8 0.2 Net Worth (INR cr)2,750 2,957 2,799 2,799 2,809 2,854 2,798 3,215 4,209 4,528 4,575 Net Debt / (Cash) (INR cr)2,314 2,568 1,910 1,355 1,106 422 286 32 (447) (173) (116) Net debt/Equity0.84x0.87x0.68x0.48x0.39x0.15x0.10x0.01x-0.11x-0.04x-0.03x Sales Volume Mix: Line Pipes
635
646
632
650
764
510
393
217
165
236
138
255
265
197
180
222
237
106
96
629
413
578
500
423
626
506
254
123
190
99
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
India (KMT)
USA (KMT)
Saudi (KMT)
Investor Presentation
6
Business Outlook
Line Pipes
India continues to be strong, both in O&G & Water sectors, with strong emphasis on creating an O&G pipeline network across the country. Also water distribution network and irrigation is a key priority. Further, CGD connectivity will provide a huge impetus for ERW pipes. Active discussions for several orders in the export markets which have seen an improvement in prospects due to high oil prices, increased demand and Europe looking to diversify its energy supply. Saudi market strong, Saudi Aramco has increased its capital expenditure guidance to $40 billion - $50 billion for 2022 from $31.9 billion in 2021. O&G market in the US also buoyant as evident from the recent order win (single largest order in the history of the company).
Ductile Iron Pipes
Huge impetus on creating drinking water supply infrastructure. Jal Shakti Ministry was allocated a total of Rs. 86,189 crore for FY23 higher from Rs. 69,052 crore allocated in the previous fiscal year. Our internal forecasts based on interactions with various industry participants, indicate a robust demand for DI pipes over the next 5-7 years with projected demand outstripping supply.
Long Products
Demand uptick stemming from the Government’s thrust on infrastructure, particularly in the rural markets, apart from the pickup in the construction activity, which will lead to increased offtake of Long Products. The government has a fixed objective of increasing rural consumption of steel from the current 19.6 kg/per capita to 38 kg/per capita by 2030-31.
Stainless Steel and Tubes & Pipes
Big push for localization of these products under Atmanirbhar Bharat initiatives. Implementation of quality order, mandatory BIS certification in India and withdrawal of export benefits by Chinese Government will act as major catalysts for the growth of this sector which is poised to grow at CAGR of 6-7% per annum. The Key Sectors are Power, Nuclear & Defence from where we see a significant demand pull.
Investor Presentation
7
Strategy for Long Term Value Creation
1
2
3
4
Business Growth & Diversification to improve Earnings Predictability and Enhance Margins
Building Resilience: Maintain Robust Balance Sheet
Accelerate ESG Initiatives
Enhancing Returns through Prudent Capital Allocation
Investor Presentation
8
WCL as “it was”: High Quality Line Pipe Business
Top 3
50+
15+ MN MT
Among Line Pipe Manufacturers globally
Approvals from O&G majors; Qualifies for global bidding
Pipes delivered since inception with multiple repeat orders
2.55 mn MT Pipes Capacity
6 manufacturing facilities in 3 countries
Used in Oil & Gas, Water industry & Structurals
Investor Presentation
9
Approvals & accreditations: Line Pipes
Oil & gas
Transportation
Others
Investor Presentation
10
Diversification of Steel Business: Solid Platform for Higher Value Products and B2C Initiatives
Large Diameter Pipes
• Global Leadership Position in this Segment • Focus on expanding customer base and presence • No Capex spend apart from regular maintenance
Ductile Iron Pipes
• Greenfield Project at Anjar with capacity of 400 KMPTA • Strong focus on creating water supply infra in India • Commissioning of Blast Furnace and Sinter plant completed
Long Products
• Manufacturing of Steel Billets and DRI • Forward integration - TMT Bars with capacity of 350 KMTPA • Commissioning of TMT Bars facility completed in July 2022
Stainless Steel and Tubes & Pipes
• Products used for critical applications, large export potential • Huge thrust on localization of these products in India • Capacity – Alloy / SS Steel: 150 KMTPA, SS pipe:18 KMTPA
Investor Presentation
Existing Business
Greenfield Project
Acquisition of the Steel Business of Welspun Steel Limited. Enlarges B2C Presence & Valuation accretive. Boutique SS Plant
11
Our Manufacturing Facilities
Capacity 1)
India
US
Saudi Arabia
Products / City
Anjar
Dahej
Mandya
Bhopal
Jhagadia
Little Rock
Dammam
350
250
200
350
400
LSAW
HSAW
ERW/ HFIW
Line Pipes (KMT)
TMT Bars (KMT)
DI Pipes (KMT)
SS Bars (KMT)
SS Pipes (KMT)
150
305
350
50
1,655
350
175
525
375
375
150
18
Note: 1) DI Pipes Capacities are upcoming
Investor Presentation
Total
700
1,480
375
2,555
350
400
150
18
12
WCL “The Way Forward”: Business Growth & Diversification Strategy
Existing
Large Diameter Pipe and Coating
Amongst the Top manufacturers globally
New
Pig Iron and DI Pipes
One of the largest standalone single location facility
Specialty Steel
Billets & TMT1)
Integrated producer from steel-making to finished products
One of the largest players in the Key Growth Market of Western India
Planned
Plastic Products
Acquisition2) of a national level brand (largest player)
B2B
B2B
B2B
B2B + B2C
B2C
s s e n i s u B
l
e a c S
t e g r a T
Note: 1) Through Forward Integration 2) Acquired Sintex BAPL Ltd.’s Non-Convertible Debentures with outstanding of Rs. 1,222 Crore for a purchase price of Rs. 418 Crore
Investor Presentation
13
Greenfield
Acquisitions
New & Planned Acquisitions
Plastic Products
•
•
•
National Brand with >10% market share (Year: 2018) in India
Extensive Distribution (~ 900) and Retail (~ 13,000) Network
Potential Synergy of leveraging this Distribution Platform within the group (Building Materials)
Billets & TMT
•
Location Advantage of Anjar (Port based) for Raw Material imports and exports of Finished Goods
• Maximum Demand for Long Products in Western Region: Target Markets are Gujarat & Rajasthan
•
TMT Bars through dealer & retail network, with direct impact on end users. Transition to B2C
Transition to B2C
Distribution Network + Strong Brand
segment and leveraging Brand Welspun
Specialty Steel
•
•
•
High Entry Barriers with approvals required from Process Licensors & EPC’s
Existing Group Company that has enabled WCL’s entry in this segment
Strong Improvment in recent performance: Pipe Sales Volumes higher by 50% for FY22
High Barriers to Entry
Investor Presentation
14
Rationale for Business Growth & Diversification Strategy
•
Earnings predictability, stronger revenue and improved competitiveness with business diversification. Strong presence in the B2C segment.
• Dominant presence across each product segment.
• Greater economies of scale will provide a larger and stronger base for potential future growth.
•
•
Synergies especially in raw material sourcing, common infrastructure, technical manpower.
Significant Value Creation for all stakeholders – Shareholders, Employees, Customers, Suppliers, Communities etc.
Investor Presentation
15
Capital Allocation at WCL
• Strong Cash Flows used for Deleveraging, Reinvesting for Growth and Rewarding Shareholders
FY22 excludes Cash Flow impact of Gain of Rs.359 crores in “Other Income” from the Saudi IPO & proceeds from the Sale of the PCMD business of Rs. 806 crores
• Consistent Dividend paying Company (Face Value = Rs. 5 per share)
• Buyback of Shares in FY20, Interim Dividend (One-time) of Rs. 10.00 per share declared in FY20
• Dividend Distribution1) policy aims for a balance between the quantum of dividend paid and amount of profits retained in the
business for reinvestment
• Expansion and diversification of product offerings remains a key growth enabler
• Will now shift focus on Incubation, Stabilization & Ramping of the new businesses
Note: 1) Dividend Diistribution Policy https://www.welspuncorp.com/system/downloads/attachments/000/000/338/original/Dividend_Distribution_Policy_08.05.2017.pdf?1494308856
Investor Presentation
16
INRFY18FY19FY20FY21FY22Dividend Per Share0.50.510.55.05.0Basic EPS - Consolidated (Cont. Ops)6.02.625.624.116.8Payout Ratio8%19%41%21%30%INR CrFY18FY19FY20FY21FY22Cash from Operations981623648774219 Towards a Cleaner & Greener Tomorrow
Hydrogen Gas Transportation
• First Indian company to have joined the H2Pipe Joint Industry Project on hydrogen pipelines
• Collaborating with 24 of the world’s premier energy companies
• Developing the world’s first guideline for the transportation of hydrogen gas in existing and new offshore pipelines
• Also partnered with Tata Steel to develop the framework and subsequently manufacturing pipes for transportation of pure
hydrogen and natural gas-blended hydrogen
Carbon Capture & Emission Reduction Technologies
Other Focus Areas
Green Steel with Lowest Carbon Footprint Possible
Investment in Renewables to meet Carbon Reduction Targets
Investor Presentation
17
Our ESG Journey
Environmental & Social
Detailed Benchmarking versus peers on ESG factors
Mapping universe of issues, objectives and risk and prioritizing them based on Materiality for WCL
Maturity Assessment
Materiality Analysis
Corporate Governance
Arrive at baseline scenario in line with WEF metrics and identification of improvement areas
Baseline & Gap Analysis
Formulation of a strategic roadmap outlining key actions to be undertaken in short, medium and long term
Roadmap
Public reporting and disclosures of ESG performance
Communication and Reporting
Board Matters / Entity Level Controls • •
ESG Committee at the board level setup Several key actions taken in line with leading practices
Related Party Framework • •
As-Is analysis of existing policy and process flow Refine scope, applicability, responsibility and appropriate controls in RPT framework
Conducted Ethics culture survey Developed a road map for training and awareness programs As-Is analysis, benchmarking and gap assessment of existing policies
Ethics Framework • • • • Updated Policies Finalized: Whistle-blower Policy, Code of Conduct, Fraud Prevention Policy & Fraud Response Plan, Disciplinary Action Matrix and Anti-Bribery & Anti-Corruption Policy
Major transformation to further strengthen ESG across our organization
Investor Presentation
18
Sustainability Targets
Aspects
FY 2020-21
Goal 2025
Goal 2030
Goal 2040
Carbon Neutrality - % Renewable Energy (RE)
Water Neutrality - Water Intensity
10% RE
20% RE
Carbon neutral
0.63 KL/MT
0.55 KL/MT
0.40 KL/MT
Water neutral
Waste to Landfill
1.53 MT
1.00 MT
0 MT
Zero waste to landfill
Impacting Lives in CSV
1,60,735
5,00,000
1,000,000
2,000,000
Sustainable Supply Chain - % suppliers assessed as per ESG compliant Code of Conduct
100% critical suppliers assessed
100% (all suppliers)
100% (all suppliers)
Note: 1) Sustainability targets for Line Pipes India business 2) Impacting Lives in CSV through Welspun Foundation
Investor Presentation
19
ESG Initiatives
‒ MoU with BP India Pvt Ltd. to jointly explore carbon emission mitigation and reduction opportunities in WCL’s energy,
logistics, mobility and waste management activities
‒ Published first Business Responsibility and Sustainability Report (BRSR) as a best practice in the industry
‒ Developed “ESG Compass” - a digital platform with automated data dashboards covering over 90 indicators for
monitoring and analysis of ESG related metrics
‒ Optimization of manufacturing processes and operations to reduce Energy, Water and Waste Intensity
‒ Including ESG in internal audit framework, expanding the scope of stakeholder relationship committee and linking
executive remuneration to ESG goals amongst several other best practices…..
Ranked in Top One-Third in Steel Industry by S&P Global’s Dow Jones Sustainability Index (DJSI) Corporate Sustainability Assessment
Investor Presentation
20
Thank You
Welspun Corp Limited CIN: L27100GJ1995PLC025609
www.welspuncorp.com
For further information, please contact:
Mr. Gaurav Ajjan gaurav_ajjan@welspun.com
October 2020