On The Path of Global Leadership
WELSPUN CITY, ANJARNovember 2011
Page 1
DisclaimerCertain 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 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.
November 2011
Page 2
Welspun GroupGlobal Recognitions Brief Synopsis One of the
fastest emerging global groups, with multiple countries strategy
and manufacturing facilities Group companies enjoys market
leadership positions : Top 2 Large Diameter Pipe Company in World
Financial Times, UKWelspun CorpWelspun Group Green IT Award for
2011 - by CIO magazine, IDG Group 2011
Welspun India
Outstanding CSR in Textiles Sector India Shining CSR Award -
Wockhardt Group 2011
Globally renowned towel company
Star Performer Award for the year 2008-09 All India Export
Excellence Awards - EEPC 2010
Global relationship with marquee clients including Fortune 100
companies like Exxon Mobil (Golden Pass Pipeline), Chevron, Shell,
Bechtel, Wal- Mart, Target etc Equity investment by renowned
investors like Apollo, ICICI Life, Temasek (Govt. of Singapore), 3i
(UK), Genesis (UK) Excellent relationship with domestic and
international lenders
Welspun Corp Economic Times Emerging Company of the Year Award
for Corporate Excellence - 2008
Welspun Corp
2nd Largest (Large Diameter) Line Pipe Manufacturer in the World
- Financial Times UK - 2008
Key Markets 80% export mainly to US, Europe, Latin America,
Africa, South East , Middle East etc
Welspun India
Supplier of the Year Award J C Penny - 2008
Welspun India
International Setup Christy, UK Sorema, Portugal Textile
facility in Mexico Office in Manhattan-NY, Huston-US Pipe &
Coating facility in Arkansas, US Pipe & Coating Facility in
Saudi ArabiaWelspun India Welspun Corp
Earth Care Awards Times of India and Jindal Steel Ltd - 2008
Welspun India
Sustainability Award - Walmart - 2007
One of the fastest growing large companies in India Business
Today - 2007
4 Gold Trophies for Outstanding Export Performance Textile
Promotion Council (TEXPROCIL) - 2007 Page 3
November 2011
WCL An Introduction WCL, flagship company of Welspun Group, is
one of the largest pipe manufacturing company in the world
Incorporated in 1995, the Company offers a complete range of high
grade line pipes ranging from 1 inch to 100 inch used inter alia
for transmission of oil & gas Partner of Choice for more than
50 Oil & Gas Giants across the globe with a geographically
diverse client base including Chevron, Exxon Mobil (Golden Pass
Pipeline), Saudi Aramco, British Gas , Kinder Morgan etc
International footprint Accredited with ISO 9001, ISO 14001 and
OHSAS 18001 certifications Strong order book of U.S. $ 0.9 Bn
Steady Growth in Revenues and ProfitConsolidated Total
Revenues(INR MM) CAGR (07-11): 31.5%90,000 75,000 60,000 45,000
30,000 15,000 0 73,503
80,236
57,395 39,945 26,83437,802
2006-07
2007-08
2008-09
2009-10
2010-111,799 (6)
H1 FY 11-12
US $ MM
617 (2)
991 (3)
1,250 (4)
1,637 (5)
769 (7)
Gross Profit(INR MM)CAGR (07-11): 44.3%11,3015,845 4,768
12,200 9,200 6,200 3,200 200US $ MM
11,5444,392
2,666 2006-07 2007-08 2008-09(3)
2009-10(4)
2010-11259(6)
H1 - FY 11-12589(7)
61
(2)
145
104
252
(5)
Shareholding Pattern, as on Sept 30, 201136.90%42.51%Promoter
Mutual FundsFII
Summary Market StatisticsAs of Nov 04 , 2011 Share Price (INR/
US$) Market Capitalization * Enterprise Value (1) INR MM 105.05
27,678 54,969 US$ MM(7) 2.14 563 1,118
Public, Banks and Financial Institutions
20.54% 0.05%Note 1. Net Debt at INR 27,291 MM as on 30 Sept,
2011 ( including WMSL) 2. Average exchange rate of US$1 = Rs 43.51
from 01-Apr-06 till 31-Mar-07 3. Average exchange rate of US$1 =
Rs.40.29 from 01-Apr-07 till 31-Mar-08 4. Average exchange rate of
US$1 = Rs.45.91 from 01-Apr-08 till 31-Mar-09
Note 5. Average exchange rate of US$1 = Rs.44.90 from 01-Apr-09
till 31-Mar-10 6. Exchange rate of US$1 = Rs. 44.595 on 31st March
2011 7. Exchange rate of US$ 1 = Rs. 49.1500 as on 03 Nov 2011 *
Total no of shares : 263.47 mn November 2011
Page 4
WCL An Introduction
Promoters (36.90%)WCL 100%
Welspun Corp Limited (WCL)
Public and Others (63.10%)WCL 100% WCL 26%
Corporate Structure
Welspun Pipes Inc, USA
Welspun Plate and Coil Mill Division Manufacturer of
state-of-art Plates and Coils
Welspun Natural Resources Pvt. Ltd. Oil & Gas Exploration
Activities
Welspun Energy Ltd Solar & Renewable Energy
100% Beneficial Interest
100% Beneficial Interest
WCL 50.01% in each (through its subsidiary)
WCL 100%
Welspun Tubular LLC Manufacturer of Pipes, Coating and Double
jointing
Welspun Global Trade LLC
Welspun Middle East Pipes Welspun Middle East Coating (Saudi
Plant)
Welspun Infratech Ltd. Infrastructure- Welspun Projects ltd
(MSK) 61.12% - Leighton Contractors India 35%
Pipes Products - Longitudinal (LSAW) - Helical / Spiral (HSAW) -
Electrical (ERW) Manufacturing FacilitiesAnjar & Dahej Pipe
Mills Premier integrated set-up for manufacturing welded pipes.
Installed state-of-the-art-technology and is completely geared to
meet the requirements of the global industry. The Longitudinal
Pipes division (LSAW) has a capacity of 350,000 metric ton per
annum. The Spiral Pipes division (HSAW) has a capacity of 550,000
metric ton per annum. The ERW Pipes division has a capacity of
200,000 metric ton per annum. It also has Coating capabilities
Plates & Coils
Oil and Gas
Renewable Energy & Infrastructure
Little Rock , Arkansas, USAWith manufacturing facility on a
740-acre site adjacent to the Little Rock Port Authority, the $150
million facility commissioned in February 2009. This API certified
facility currently employs more than 300 people and is capable of
producing 350,000 tons of HSAW pipes annually for the use of the
oil and gas industry. The facility can produce Pipes from 24 to 60
inches as outer diameter; 6 mm to 25 mm as wall thickness and
length of 40 -80ft. It also has Coating and Double Jointing
capabilities and is a one-stop-solution provider to Welspun's
valued customers November 2011
Dammam, Saudi Arabia Manufacturing facility of 300,000 tons p.a
of HSAW pipes with Coating facility for the use of the oil and gas
industry.
Plate-cum-Coil MillThis backward integration at Anjar, Kutch,
Gujarat, India has annual capacity to produce 1.5 million tones of
Plate and Coil with plates (up to 4.5 meters wide, 140 mm
thickness) and Coil (up to 2.8 meters wide, 25 mm thickness) with
strength of 120,000 PSI. This mill can cater to high end
specialized product requirement of Line Pipe Industry (API grades),
Shipping, Heavy construction, Bridges, Boiler plates, Wind blades
etc.
Page 5
WCL An Introduction
Promoters (36.90%)Corporate StructureWCL 87.5%
Welspun Corp Limited (WCL)
Public and Others (63.10%)
Welspun MaxSteel Ltd
Products
Steel ( Directly Reduced Iron )
Manufacturing Facilities
- Capacity : DRI (Sponge Iron- Gas based) : 0.9mn MTPA being
enhanced o 1.7 mn mtpa at Village Salav , MaharashtraState of art
technology (in Sponge iron): HYL III from HYLSA of Mexico.(Now
Tenova Italy) Engineering expertise of Davy Dravo of USA
November 2011
Page 6
Growth at InfinityRevenue Rs. 37,802 mn. Growth H1 FY 2012 8 Rs.
80,236 mn. Rs. 73,637 mn. Rs. 57,395 mn. Rs. 39,945 mn.
20112010 2009 2008
- 350,000 tons LSAW pipe capacity completed Trial Production -
Mandya Plant Capacity Expansion to 150,000 MT - Initiative of
Setting up new ERW Plant 200,000 tons in US Saudi Plant - capacity
of 300,000 MT operational 100,000 tons HSAW Plant in Karnataka
operational Foray into infra & pipe laying for O&G and
water through MSK Projects India Ltd. 350,000 tons US Spiral Mill
commissioned150,000 tons Spiral Mill commissioned Commissioning of
Plate Mill & 43 MW Power Plant
Rs. 26,834 mn.
2007 2006 2005 2004 2001 2000 1998
Anjar Facility , A Key Contributor Approvals from O&G majors
for new facility
Rs. 18,298 mn. Rs. 10,385 mn. Rs. 8,277 mn. Rs. 2,565 mn. Rs.
585 mn. Rs. 180 mn.
New Capacity at Anjar, Gujarat for HSAW & Coating Merger of
coating J.V. with WCL
Pipe Coating in JV with EUPEC, Germany Dahej, Gujarat LSAW,
Dahej, Gujarat
HSAW, Dahej, Gujarat
Incorporated
1995 Embarked on a Growth Journey
November 2011
Page 7
Welspun Corp Limited: Strong Value & Growth Story
1
Strong Industry Fundamentals
2
Robust Business Fundamentals & Healthy Order Book
3
Global Footprint & Pre Approved with Oil & Gas
Majors
4
Strong Management Team with Proven Execution Capabilities
5
Exponential Growth in Revenues & Margins
6
Welspun Maxsteel LtdNovember 2011
Page 8
1. Strong Industry FundamentalsRelatively Few Major Players
Industry is highly capital intensive with high barriers to entry
Niche markets exist which have been effectively exploited by
Welspun Reliability and reputation for excellence are paramount, as
pipelines are used for critical applications such as oil and gas
transport Prospects for the industry brightening with oil prices
gaining strengthRegion North America Latin America Europe Africa
Projects 284 55 154 56 165 153 81 948
International Demand Outlook till 2016Total Length (kms) 76,324
36,200 44,571 25,383 51,100 77,133 18,838 329,549 Business
Potential (US$ Bn)(1) 21 18 23 8 22 40 6
Share of Expected Demand (% for MT)Until 2016
Quantity (MMT) 18 16 19 7 19 33 5 115
Global Demand Business potential of around USD 123 Bn (3) -
Simdex Replacement of the old pipelines in US New Gas is required
to replace annual decline in existing gas supplies in North
America, which shall enhance demand for new pipelines Shale Gas
gradually increase its share in total gas requirement in US Alaska
Pipeline project -another boost to the demand for pipes
Middle East Asia Australasia Total
Source: Simdex Pipeline Projects Future Guide database , US,
Sept 2011
138
Source: Simdex Pipeline Projects Future Guide database , US,
Sept 2011
Proposed pipeline of GAIL Phase I by 2011 (Under Execution) Add.
Cap (MMSCMD ) 80 31 35 146
Domestic Market SizeCompany Total Length (kms) Business Quantity
Potential (KMT)(1) (US$ Bn)(2)
Name of Pipeline DVPL Ph -II / Vijaypur Dadri Dadri - Bawana -
Nangal
Length (Kms) 1,109 594 349 2,052
Cost (Rs Cr) 10,764 2,358 1,315 14,437
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 Regulatory Board (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 pipesSource:
Industry Sources
GAIL
6,642
1,328
1.6
Chainsa - Jhajjhar - Hissar Sub Total
RGTIL
2,750
550
0.7
Phase II by 2012 (Approved in 2009) Name of Pipeline Jagdishpur
- Haldia Dabhol - Bangalore Length (Kms) 2,050 1,414 1,126 4,590
6,642 Cost (Rs Cr) 7,596 4,994 3,263 15,853 30,290 Add. Cap (MMSCMD
) 32 16 16 64 210
GSPL
5,675
1,135
1.4
Total
15,067
3,015
3.7
Source: GAIL India Ltd Presentation Feb 11 / Company data
Kochi - Mangalore - Bangalore Sub Total Grand TotalSource
Welspun is well placed, with global clients and state-ofthe-art
technology, to capitalise on this opportunityNote 1. Conversion
rate of $1,200 / ton 2. As illustrated in the adjoining tables
GAIL India Investor Presentation , Feb 2011
November 2011
Page 9
1. Strong Industry FundamentalsOutlookThere is significant
evidence that the global economy is facing more long-term obstacles
once again than one would like to think. The global economy is
trying to recover from the most recent global recession that
started on 2009. The different aspects of global economic scenario,
geo-political structures andenvironmental overhang are making short
term outlook challenging. However we believe that the medium to
long term prospects of our various businesses continue to be
strong:
Line Pipes: Volatility in the global market has resulted in
uneven order flows. While demand for pipes continuous to be robust
globally, current deferment of orders by large oil and gas
companies may result into lumpy order flows in near future. During
the period under review, the Company received new orders worth Rs
11 billion signifying the capability and strength of the business.
We believe that going forward the US government and the EU steps to
correct the economic concerns will result into spending on pipe
infrastructure (including replacement) crucial for revival of
economic activities. Consequently, the Line Pipe business is
expected to see an upside in the demand. There are plans of major
downstream capex programs by most of the large oil & gas
companies.
The recent Shale Gas development in North America and Europe
shall enable energy security in the region. India is also
preparingconstruction of pipelines (both in Government as well as
in private sector) as the domestic gas availability is poised to
increase over the years. Latent demand from the US replacement
market and TransCanadas proposed Alaska pipeline hold further
upside potential in medium and longer terms.
Plates & Coils: The plates & coil business is undergoing
through one of the most challenging phase globally. The company
shall continue to work on building high-end plate capabilities,
resulting in our ability to provide plates & coils for our
extreme end captive consumption.
Infrastructure: Indias need for Infrastructure is well
understood and emphasized; Welspun Infratech is taking part in this
growth story by bidding for various prestigious projects which
should fructify in the coming quarters thus resulting in not only
strong developer position but also enhancing order book position
for our EPC business.
November 2011
Page 10
2. Robust Business Fundamentals & Healthy Order BookStrongly
Positioned Current Capacities000 MT pa2,500
Going Strength to StrengthFY07 Oil & Gas Co Approval 36 FY09
>50 FY10 >50 FY11 >55
Welspun serves several marquee customers like Exxon Mobil
(Golden Pass Pipeline), Kinder Morgan, Ruby (El Paso) and GAIL
because of its specialized offerings It has long term contracts
with giants like TransCanada; and framework agreements with
Chevron, Saudi Aramco, etc Successfully expanded into highly
competitive North and Latin America to take advantage of higher
realizations
2,1001,700 1,300
600 501,850Production ( '000 MT) 501 717 814 958
900500 100
1,500
Revenue (US$ MM) PAT (US$ MM) No. of countries
571
1,250
1,637
1,799
350 350
1,300200 20036 Global 67% 47 Global 72% 136 Global 71% 142
Global 75%
(300) LSAW HSAW ERW Total Pipe Plate Mill
Export Market
Existing Capacities
New Capacities
Production Growth000 MT1,2001,000 958 670 718
Export Market Gaining Dominance (Exports by Value )
100%18%814
80% 60%
33%
28%
29%
34%
800600
501 377 193384
500 379210
400 2000
40% 20%
82%
67%
72%
71%
66%
FY06
FY07 Pipes
FY08 Plates
FY09
FY10
FY11
H1 FY11-12
0%FY07 FY08 Export FY09 DomesticPage 11
FY10
FY11
November 2011
2. Robust Business Fundamentals & Healthy Order Book
2011
Global best LSAW Players
Corus Welspun Europipe
Worlds best LSAW Players High end LSAW players with global sales
Players capable of mfg > 48 OD, > 30mm WT, X80 and sour
grades
Japanese, ILVA2007
High-end LSAW Players2003
13 Players globally
All LSAW Players2000 Welspuns Journey
83 Players globally
All players having LSAW technology for Line Pipes
Welspun is one of the worlds foremost players in LSAW
marketSource: Metal bulletinNovember 2011
Page 12
2. Robust Business Fundamentals & Healthy Order Book
WELSPUNS COMPETITIVE POSITIONING: HSAW - REGIONWISE
North America
Domestic Little Rock Middle East Dammam Anjar Dahej Mandya
Africa Latin America Plants Regions covered Regions under
focus
November 2011
Page 13
2. Robust Business Fundamentals & Healthy Order Book
LONG TERM SUSTAINANCE How Welspun will sustain
How Welspun reached hereMoving to niche markets like deep
offshore and sour pipelines market Client specifications and
requirements getting challenging every day which is an advantage
for WCL Proximity to customer Professional execution Highly trained
and motivated workforce Zero Tolerance Quality Standard
Technology Product profile Approvals and accreditations
Servicing key and challenging orders People
Humble beginnings
TodayNovember 2011
The futurePage 14
2. Robust Business Fundamentals & Healthy Order Book KEY
GROWTH FACTORS FOR WELSPUN Welspuns position as a high end
technology driven organisation reaching international levels
Increasing crude oil prices catalysing exploration, production and
pipeline laying Development of newer oil and gas fields, shale gas
etc Tougher norms on pipeline integrity, giving a boost to pipeline
replacement market Increasing requirements for high end pipes
Multi-locational advantage Elite positioning which can be leveraged
for high end projects Welspun on the path of becoming fully
integrated Welspuns drive to get closer to customers with
international sales offices and agents focused on each geography
18m length pipes - Key to future Track record of offshore and sour
projects Excellent track record on High WT, OOR, OOS Capability,
consistency and continuously improving performance recognised by
global communityNovember 2011
Page 15
2. Robust Business Fundamentals & Healthy Order Book
Process
Process
Process
Raw Steel
Steel Slab(API Grade)
Steel Plates/ Coils (API Grade)
Pipes(API Grade for O&G)
Selling Price (1): $ 750- 800 /ton.
Selling Price (1):
Selling Price (1):
$ 950-1,050 /ton.
$ 1,050-1,250/ton.
Welpsuns Value Chain (from Slabs to Pipes)
Backward integration into plates provides critical value
advantage Opportunity to service the high end steel category which
is currently serviced through importsNote 1. Indicative market
prices November 2011
Page 16
2. Robust Business Fundamentals & Healthy Order BookYear FY
2008-09 Pipe Orders Booked During Year / Qtr MT (in '000 tons) 807
Orders Executed MT (in '000 tons) Closing Pipe Orders MT (in '000
tons)
695
781
FY 2009-10FY 2010-11
824844
814909
791726
Q1 FY 2011-12Q2 FY 2011-12
116135
203210
640565
Current Order (Pipes & Plates) book stands at USD 0.9
bnCurrent Order Book Geographical Distribution by Volume72%80% 60%
28% 40% 20%
Some of the Top Clients for Pipes Client Country
EnterpriseTranscanada Pipe Line Limited WASIT ZakhimExport
Domestic
USACanada Middle East Nigeria India
0%
GAIL
November 2011
Page 17
3. Global Footprint & Pre Approved with Oil & Gas
MajorsGlobal Market ExpansionWorlds largest diameter steel pipe
producers(1)
2007 output (million tonnes)Salzgitter/Europipe* (Germany)Iraq
Saudi Arabia Spain Russia Canada US (Trader Mkt.) US (Projects)
Mexico Peru Tunisia Algeria Libya Venezuela China Bangladesh
Thailand Malaysia
1.3
Welspun (India)JFE (Japan) Sumitomo (Japan) Evraz** (Russia)
Nippon Steel (Japan) Riva (Italy) PSL (India) JSW (India)
ArcelorMittal (Luxembourg)
1.00.7 0.7 0.6 0.6 0.6 0.5 0.3 0.2 0.1 0.1 7.3
Egypt
Oman Qatar Indonesia
BoliviaSudanColumbia
Year 20002001 Year 20052006 Year 2010-2011
Year 2001 2002 Year 2006 2007
Year 2002 2003 Year 2007 2008
Year 20032004 Year 20082009
Year 2004 2005 Year 2009 2010
Stupp (US) Tata/Corus (India/UK/Netherlands) Others***
What Sets WCL Apart From Competition Decade Long Experience All
Solutions Under One Roof High Capacity Equipment to Meet Future
Demand Backward Integration with In-house Plate-cum-Coil-Mill
Framework Agreements Features- Selected few companies considered
for supplies that meet stringent process of qualification -
Typically customers with large requirement over a period of time -
Flexibility in pricing terms and continuous business
Current Framework Agreements- Chevron, Saudi Aramco (pipe
purchase agreement)
WCL was rated 2nd largest Pipe Company in 2007 and has since
reached capacity of 1.85 MTPANote 1. As reported by Financial Times
on April 13, 2008 November 2011
Page 18
3. Global Footprint & Pre Approved with Oil & Gas
MajorsAGIP BECHTEL BRITISH GAS BRITISH PETROLEUM CHINA NATIONAL
PETROLEUM CORPORATION CPMEC, CHINA CHEVRON (Framework Agreement)
DOW RUBY (ELPASO) EGYPTIAN GENERAL PETROLEUM CORPORATION ENTERPRISE
EXXON-MOBIL (GOLDEN PASS PIPELINE) GROUP FIVE , Saudi Arabia GAIL
GASCO, ABUDHABI GASCO, EGYPT GAZPROM (STROYTRANSGAZ) KINDER MORGAN
MOGE, MYANMER N.A.O.C. - NIGERIA NPCC, ABU DHABI NTPC ONGC PETRO
CHINA PETRONAS, MALAYSIA PDO, OMAN PGN, INDONESIA QATAR PETROLEUM
RELIANCE INDUSTRIES LIMITED SAIPEM, SNAM SAUDI ARAMCO (Framework
Agreement) SHELL STOLT OFFSHORE Acergy SONATRACH TOTAL TECHNIP
TRANSCANADA (Long Term Contract) UNOCAL PERU LNG (HUNT OIL)
VIETSOPETRO WASIT
Accreditation Process A significant entry barrier
Approval from major domestic / international oil and gas
companies Seeking API approval 1 year 2 3 years
Setting up plant 2 years
3 - 5 years
November 2011
Page 19
4. Strong Management Team with Proven Execution
CapabilitiesManagement TeamMr. B.K. Goenka is the Chairman, and the
chief architect of the Welspun Group. Today, with his
entrepreneurial ability and professionalism, he has built up one of
the most admired business conglomerates Mr. B.R. Jaju serves as
Director & CFO. A Chartered accountant by profession, member of
Company Secretary (FCS), as well as a Law Degree (LL.B). He has a
rich experience over 30 years in finance and global M&A
activities. Mr. Jaju has been awarded 3 times as Best Performing
CFO in the year 2003, 2005 and 2006, by the most credible
nationally renowned jury. Mr. L. T. Hotwani is the Director, of
Welspun Corp Limited. With a rich experience of over 36 years, Mr.
Hotwani is instrumental in sourcing raw materials and managing
supply chain with global players
Mr. R.R. Mandawewala is the Managing Director, a key contributor
in Welspuns journey. A Chartered Accountant by profession and with
over 25 years of experience, he has expertise varying from Textiles
to SAW pipes.
Mr. Mintoo Bhandari, serves as Director on Board (Nominee of a
shareholder) in WCL. Mr. Bhandari also serves on the board of
directors of SOURCECORP, Dish TV India Limited and Wire &
Wireless (India) Ltd. Mr. Bhandari graduated with an SB in
Mechanical Engineering from MIT and with an MBA from the Harvard
Business School. Mr. Akhil Jindal serves as Director of Corporate
Affairs. He graduated with an Engineering Degree , MBA from Indian
Institute of Management, Bangalore. Mr. Jindal is responsible for
strategic inorganic/organic initiatives within the Group and has
spearheaded large fund raisings, cross border acquisitions, private
equity raisings and financial closure of projects exceeding over
US$ 1 bn. Mr. David J. Delie serves as President Welspun Tubular
LLC. A graduate in Science (Electrical Engineering) and a Masters
Degree in Engineering Management from the University of Pittsburgh,
he has an extensive 33-year background 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). November 2011
Mr. Prashant Mukherjee serves as Director of Welded Pipes. 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 expansion projects in the
Company
Mr. Vipul Mathur is the Director of Marketing & Sales (Pipes
& Plates Division). A Science Graduate and Masters in Business
Administration (MBA) in Marketing, he has a rich experience of over
16 years in the Oil & Gas Pipe Industry
Mr. Akbar Umatiya is Vice President & Unit Head of Welspun
Middle East LLC (Saudi Plant) A technocrat Professional having more
than 26 years of versatile experience in various fields like
Operations, Project Executions and Marketing in India and Overseas.
He has proven capability to perform in International environment
studded with a mix of diverse cultures and to develop Technical and
professional abilities for team building to enhance superior
quality work.Page 20
4. Strong Management Team with Proven Execution Capabilities
LSAW Pipes
ERW Pipes
HSAW PipesNovember 2011
Coating of PipesPage 21
4. Strong Management Team with Proven Execution Capabilities
Plates
Plates
US PlantNovember 2011
Page 22
4. Strong Management Team with Proven Execution CapabilitiesUS
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 API approvals Key supplier for last 5 years in US
with client list that includes Chevron, Exxon Mobil (Golden Pass
Pipeline), Kinder-Morgan and Ruby (El Paso) Framework agreement
with Chevron, making Welspun one of the three global preferred
vendor for next 3-5 years In H1 FY 2012 utilization levels ramp-up
to 67%
November 2011
Page 23
4. Strong Management Team with Proven Execution
CapabilitiesSaudi Plant
Rationale for Saudi Plant Opportunity to locate closer to
customers who were facing supply challenges Savings on
Transportation cost State of the art facility at Damman, Saudi
Arabia. Commissioned in Dec -10. Tap the market, which is amongst
the fastest growing Key supplier for in Middle East with client
list that includes Saudi Aramco etc In FY H1 2012 utilization
levels at 52%.
November 2011
Page 24
5. Exponential Growth in Revenues & MarginsSales
(volume)(000 MT)CAGR (06-11): 20.5%
Consolidated Revenues (1)(INR MM)814 909(#) (#)
CAGR (06-11): 34.4%
850 650 450 250 502005-06 2006-07
641 501 371
695387
485
100,000412219(#)
73,503 57,395 18,2982005-06
80,236 37,802
(#)
75,000 50,000 25,000 02006-07 2007-08
1542007-08 2008-09 2009-10 2010-11 H1 FY 11-12
26,834
39,945
# Plates
2008-09
2009-10
2010-11 H1 11-12
US$ MM
413
(2)
617
(3)
991
(4)
(5)
1,250
1,637
(7)
(9)
1799
769
(11)
EBITDA (1)(INR MM)15,500 12,500 9,500 6,500 3,500 5002005-06
2006-07 2007-08 2008-09(4)
Profit After Tax(INR MM)(8) 13,186
CAGR (06-11): 51.1%14,105*(10) 13,015 6,153* (10 a) 5,447
CAGR (06-11): 59.5%6,104(6)
PAT Margin (%)7,108 6,330(10)
7,550
16.0%12.0%(10 a)
6,0504,5503,4081,425 6142005-06 2006-07 2007-08 2008-09 2009-10
2010-11(9)
6,555 3,384 1,655
6,348 (6)
2,644*2,135
8.0%4.0% 0.0%
3,0501,550 50
2009-10
2010-11
H1 11-12
2010-11 H1 11-12(9)
US$ MM
37
(2)
78
(3)
163
138
(5)
294
(7)
292
(9)
125
(11)
US$ MM
14
(2)
33
(3)
85
(4)
47
(5)
136
(7)
142
159
54
(11)
Notes 1. Excluding Other Income 2. 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-07 4.
Using avg. exchange rate of US$1 = Rs.40.29 from 01-Apr-07 till
31-Mar-08 5. Using avg. exchange rate of US$1 = Rs.45.91 from
01-Apr-08 till 31-Mar-09 * Operational EBITDA & Adjusted PAT n
FY 2010-11 post adjustments in Note 10 &10a
Notes 6. Includes extraordinary items : forex provisioning of
INR1,256MM, Inventory write-down of INR 385MM, ECB provisions of
INR 178MM 7. Using avg. exchange rate of US$1 = Rs.44.90 from
01-Apr-09 till 31-Mar-10 8. Includes recovery of past forex
provisioning ( in FY09) , which is reflected in better realization
and cost of material 9. Exchange rate of US$1 = Rs.44..595 as at
31-Mar 11 10. Includes export rebate of Rs. 734 million on receipt
of favorable judgment from Honorable Supreme Court. and provision
of Rs. 2,007 million on account of settlement with one of the
customers thereby ending long pending litigation 10a. Note: Q2 FY12
performance is adversely impacted by Rs 1,108 million - foreign
exchange provision of Rs 458.4 million and provisions of Rs 649.4
million related to amicable settlement with Customers. 11. Exchange
Rate : US$1 = Rs. 49.1500 as on 03 Nov 2011
November 2011
Page 25
5. Exponential Growth in Revenues & MarginsEPS
(Rs./Share)(Diluted)35 28 21 14 8.7 7 0 2005-06 2006-07 2007-08
2008-09 2009-10 2010-11 4.2 18.3 11.5
CAGR (06-11): 46.6%28.4 28.7
ROCE and ROE (%)
November 2011
Page 26
5. Exponential Growth in Revenues & Margins
Consolidated Balance Sheet (Rs. Mn.) Sources of Funds
Shareholders' Funds Share Capital Reserves and Surplus Share
Appilcation Money Minority Interest Foreign Currency Monetary Item
Translation Difference A/c Loan Funds Secured Loans Unsecured Loans
* Deferred Tax Liabilities (Net) Total
FY2009
FY2010
FY 2011
30th Sept 2011
932 14,664 15,597 0 26,435 103 26,538 2,488 44,623
1,022 27,990 29,011 0 75 18,654 6,822 25,476 3,352 57,915
1,023 33,672 34,695 2,024 65 29,370 8,690 38,060 4,344
79,188
1,139 39,862 121 41,122 3,489 38,059 20,194 58,253 4,960
107,825
* Includes CCD (compulsorily convertible debentures of Rs. 7,883
mn
November 2011
Page 27
5. Exponential Growth in Revenues & MarginsConsolidated
Balance Sheet (Rs. Mn.) Application Of Funds Fixed Assets including
BOT Gross Block Less:Depreciation/Amortisation/Impairment Net Block
Capital Work-In-Progress Net Fixed Assets Investments Foreign
Currency Monetary Item Translation Difference A/c Current Assets,
Loans and Advances Income Accrued on Investments Inventories Sundry
Debtors Cash and Bank Balances Loans and Advances Less : Current
Liabilities and Provisions Current Liabilities Provisions Net
Current Assets Preliminary Expenses Deferred Revenue Expenditure
TotalNovember 2011
FY2009
FY2010
FY 2011
30th Sept 2011
34,844 3,847 30,996 5,808 36,804 1,140 355 113 26,113 4,601
9,470 5,552 45,848 38,955 601 39,555 6,293 0 31 44,623
38,810 5,889 32,921 5,412 38,333 1,596 13 20,322 8,077 17,028
6,031 51,471 32,291 1,219 33,510 17,961 0 25 57,915
51,354 8,683 42,671 8,889 51,560 14,405 145 18,479 12,915 7,532
5,321 44,392 30,171 1,022 31,193 13,199 1 23 79,188
71,024 11,405 59,620 14,670 74,290 18,385 225 39 21,857 18,098
4,872 9,504 54,370 38,746 725 39,471 14,899 25 107,825Page 28
H1 & Q2 FY 2011-12 HighlightsMajor Highlights in H1 & Q2
FY-12 Sales Supported by volume growth from US pipe plant and Saudi
pipe plant Sustained volumes of plate and coil Strong Operational
EBITDA of 15.7% in Q2 FY2012 despite setback on gas supply in DRI
business - impact of Rs 250 million. Interest is higher mainly due
to consolidation of businesses - Saudi operations: Rs 33 million,
Welspun Projects: Rs 38 million, Leighton Welspun: Rs 5 million and
Welspun Maxsteel: Rs 76 million. Depreciation is also higher on
account of capitalizations in India operations: Rs 19 million, US
operations Rs 37 million and consolidation of acquired businesses
including Saudi operations: Rs 97 million, Leighton Welspun and
Welspun Project of Rs 39 million and Welspun Maxsteel: Rs 39
million. Consequently, Adjusted Profit after Tax is at Rs. 2,644
million, equivalent to 7% in H1 FY2012. Exceptional volatility in
foreign exchange has resulted in sharp depreciation of Rupee from
Rs 44.70 levels to Rs 48.98 per dollar and has resulted in a
provision of Rs 458.4 million. The consolidated Net Debt position
stands at Rs 27,291 million, resulting in net debt: equity of 0.55
times
Summary of FY11
(Rs. Million)
Particulars Sales Operating EBITDA Interest Depreciation PAT
(Adjusted) Cash PAT (Adjusted)
Q2 FY12 20,345 3,202 621 845 1,453 2,364
Q1 FY12 17,457 2,951 434 768 1,191 2,157
Q2 FY11 18,524 3,193 374 614 1,778 2,852
H1 FY 12 37,802 6,153 1,056 1,613 2,644 4,521
Note: Q2 FY12 performance is adversely impacted by Rs 1,108
million - foreign exchange provision of Rs 458.4 million and
provisions of Rs 649.4 million related to amicable settlement with
customers.
Breakdown of Production and Sales in MTProduction Volume (in
tons) Total Pipes Consolidated Plates & Coils Q2 FY12 199,460
101,873 Q1 FY12 179,901 108,145 Q2 FY11 254,337 111,546 H1 FY12
379,362 210,018 H1 FY11 507,827 228,356 FY11 957,656 499,960
Sales Volume (in tons) Total Pipes Consolidated Plates &
Coils*Includes internal sales
Q2 FY12 210,284 104,179
Q1 FY12 202,544 114,611
Q2 FY11 229,688 128,358
H1 FY12 412,829 218,789
H1 FY11 476,251 231,427
FY11 909,025 485,157
Status of Projects
LSAW Plant at Anjar (Gujarat): LSAW Plant with the capacity of
350,000 MTPA at Anjar has successfully completed its trial run and
is being capitalized in H2 FY2012. Capacity expansion for water
pipes at Mandya (Karnataka): Given the strong demand for water
pipes, the company is expanding its Mandya plant capacity from
100,000
MTPA to 150,000 MTPA. This expansion shall be carried out within
the original budget of Rs 100 Crs. New ERW Plant in US: To service
its O&G clients across the entire product range, the Company is
putting up 200,000 MTPA ERW Plant in US, at a cost of USD 76
million @ 26% IRR. This new initiative of ERW pipes from 8-24
will enable the company to offer product range from to 120 from its
various facilities. The project is expected to be completed in 12
months and shall achieve optimal utilization in FY 14. Slab
Expansion in Welspun Maxsteel Ltd: Welspuns vision is to have a
strong integrated positioning as a pipe-player by becoming an
iron-ore to pipe company. Directly
Reduced Iron (DRI) business had an excellent beginning with
strong profitability in Q1 FY2012, however, lack of gas supply from
assured sources has adversely impacted the Q2 FY2012 performance.
Looking at the uncertain gas environment, the proposed slab
expansion at Welspun Maxsteel is contingent upon securing long term
gas availability at reasonable prices or on alternative fuel
source/technology. November 2011 Page 29
Summary
1
Strong Industry Fundamentals Capital intensive, high barriers to
entry North America expected to lead demand
5
Exponential Growth in Revenues & Margins Revenues have grown
at a CAGR of 34.4% over the last five years (06-11) PAT has grown
at a CAGR of 59.5% in the same period
2
Robust Business Fundamentals & Healthy Order Book Strong
volume growth Order Book in excess of US$ 0.9 Bn Capacities of
global size Comprehensive product mix
4
Strong Management Team with Proven Execution Capabilities
Recognized by the FT as the second largest steel pipe producer in
the world in 2007 First Indian company to supply pipes for offshore
projects in US
3
Global Footprint & Pre Approved with O&G Majors Presence
across more than 25 countries Pre-approved with more than 55
O&G Majors
November 2011
Page 30
Welspun on the Path of Global Leadership
Scale Leadership
Scale of operations through large economic plants across the
globe
Cost Leadership
Produce world class products at the least cost and maintain
competitive edge
Technology Leadership
Adopt and innovate cutting-edge technology to satisfy stringent
requirements of customers
Quality Leadership
Consistent focus on quality at all levels; be the best in
delighting customers
Process Leadership
Most efficient and effective processes to achieve optimal
utilizations
People Leadership
Best in class people : Produce extraordinary results
Global Leadership Serve Globally, Act LocallyNovember 2011
Page 31
Welspun Maxsteel Limited (WMSL)Largest merchant Gas based Sponge
Iron (DRI/HBI) facility in India Capacity being increased from 0.9
MTPA to 1.7 MTPA
November 2011
Page 32
WMSL - An Introduction WMSL became subsidiary of Welspun Steel
Ltd. in May-09 Erstwhile Vikram Ispat (VI) a division of Grasim
Industries Ltd.
Sponge Iron Plant set up in 1989 with a capacity of 0.75 mn MTPA
State of art technology: HYL III from HYLSA of Mexico.(Now Tenova
Italy) Engineering expertise of Davy Dravo of USA Production has
increased from 420,000 MT in FY09 to ~850,000 in FY11* Rated as the
Most Reliable Supplier by AC Neilson Customer Satisfaction Survey
2010.
*13 month period ended 30th April 2011 (12 months effectively as
the plant was shutdown for over 1 month for repairs and
maintenance
November 2011
Page 33
WMSL : Ready Infrastructure Strategic Coastal Location At Salav
Village, Raigad District, Maharashtra, India 130 Kms South of
Mumbai
Land Spread over 435 acres & ~200 acres has been further
acquired. Acquisition of additional 150-200 acres under
progress.
Captive Jetty Available draft of 4 metres
Mini bulk carriers handling upto 3,400 DWT
Captive Power Generation 8.7 MW: By waste heat from production
Self sufficiency
Water met from nearby Kolad Dam Colony for employees with all
facilities
November 2011
Page 34
WMSL : Input Linkages
Iron & Pellets
Long term linkages for key raw materials Lump Ore with NMDC
Pellets with GIIC, Vale
GAIL - APM Reliance
Gas Allocation
GAIL A TrancheRLNG
November 2011
Page 35
WMSL - Marquee Customers
NATIONAL STEEL CORPORATION, PHILLIPINES PT Ispat, Indonesia
Vardhman Special Steels
THE INDIAN SMELTING BHUWALKA STEEL IRAJ PROFILES
*13 month period ended 30th April 2011 (12 months effectively as
the plant was shutdown for over 1 month for repairs and
maintenance
November 2011
Page 36
Gas based DRI best suited for quality steel makingTwo Routes Gas
Based HYL & Midrex
Coal Based LURGI , SL/RN etc.Typical AnalysisParametersFe(T)
FE(M) Carbon Sulphur Phosphorus Gangue * - Available upto 2.5%
Gas based HBI/DRI93 - 94% 86 - 88% 1 - 2%* 0.008 0.010% 0.030
0.035% 3 3.5%
Coal based DRI90 - 91% 80 - 82% 0.1 0.3% 0.020 0.050% 0.040
0.050% 6 7% NOT SUITABLE FOR CLEAN STEEL
November 2011
Page 37
Investment in WMSL WCL to purchase 87.5% of secondary stake for
Rs 805 Crore Apollo to purchase 12.5% of secondary stake for Rs 140
Crore Further Apollo to infuse additional Rs 130 Crore as fresh
capital towards expansion of steel project Balance Capital infusion
by WCL towards expansion of Steel Project
November 2011
Page 38
In Effect : Capturing the Entire Value Chain Multifold
BenefitsProposed Steel Slab Plant to feed Plate Mill
Refined & alloyed liquid Steel
SLABS API grades upto X-120 Weldox & Hardox grades Boiler
Plate grades Ship Building & others
Steel Plates/ Coils
O&G pipes Offshore Wind tower Engineered products
Selling Price (1): ~ $ 800 /ton. DRI
Selling Price (1): $ 950-1050 /ton.
Selling Price (1): $ 1050-1250/ton.
Welspuns Value Chain (from Slabs to Pipes)
Pellet
Lump Ore
Mining
CAPTURING THE ENTIRE VALUE CHAINBackward integration into plates
has provided critical value advantage. Opportunity to service the
high end steel category which is serviced through imports
Note 1. Indicative market prices November 2011
Page 39
Thank You
For further details, please contact:
Akhil Jindal Director - Corporate Affairs Email:
[email protected]
Navin Agarwal VP - Corporate Affairs Email:
[email protected]
Company Website: http://www.welspuncorp.comNovember 2011
Page 40
