WCL - Investor & Analyst meet - Welspun Corp Ltd.
WCL - Investor & Analyst meet - Welspun Corp Ltd.
WCL - Investor & Analyst meet - Welspun Corp Ltd.
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<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
<strong>WCL</strong> - <strong>Investor</strong> & <strong>Analyst</strong> <strong>meet</strong><br />
Breaking the ‘Million Ton’ Barrier<br />
30 May 2013
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Disclaimer<br />
Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking<br />
statements,” including those relating to general business plans and strategy of <strong>Welspun</strong> <strong>Corp</strong>. Limited (“<strong>WCL</strong>"), its future outlook and<br />
growth prospects, and future developments in its businesses and its competitive and regulatory environment. Actual results may differ<br />
materially from these forward-looking statements due to a number of factors, inter alia including future changes or developments in<br />
<strong>WCL</strong>'s business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological<br />
changes and political, economic, regulatory and social conditions in India. This presentation does not constitute a prospectus, offering<br />
circular or offering memorandum or an offer invitation, or a solicitation of any offer, to purchase or sell, any securities of <strong>WCL</strong> and<br />
should not be considered or construed in any manner whatsoever as a recommendation that any person should subscribe for or<br />
purchase any of <strong>WCL</strong>'s securities. Neither this presentation nor any other documentation or information (or any part thereof) delivered<br />
or supplied under or in relation thereto shall be deemed to constitute an offer of or an invitation by or on behalf of <strong>WCL</strong> to subscribe<br />
for or purchase any of its securities.<br />
<strong>WCL</strong>, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with<br />
respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information<br />
contained in this presentation, unless otherwise specified is only current as of the date of this presentation. <strong>WCL</strong> assumes no<br />
responsibility to publicly amend, modify or revise any forward looking statements contained herein, on the basis of any subsequent<br />
development, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is<br />
based on management information and estimates. The information contained herein is subject to change without notice and past<br />
performance is not indicative of future results. <strong>WCL</strong> may alter, modify or otherwise change in any manner the content of this<br />
presentation, without obligation to notify any person of such revision or changes. This presentation may not be copied and<br />
disseminated in any manner.<br />
THE INFORMATION PRESENTED HERE IS NOT AN OFFER INVITATION OR SOLICITATION OF ANY OFFER TO PURCHASE OR SELL ANY<br />
SHARES OR ANY OTHER SECURITY OF <strong>WCL</strong>.<br />
This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.<br />
These materials are not an offer or solicitation of any offer of securities for purchase or sale in or into the United States, Canada or<br />
Japan.
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Agenda<br />
FY13 SCORE CARD<br />
PROPOSED DEMERGER OF <strong>WCL</strong><br />
VISION & WAY FORWARD
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
FY13 SCORE CARD<br />
PROPOSED DEMERGER OF <strong>WCL</strong><br />
VISION & WAY FORWARD
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
FINANCIAL SCORE CARD
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Financial highlights – Consolidated – Stable operational performance<br />
‣ Challenging environment, however performance in line with expectations<br />
Particulars (In Rs. Mn) FY12 FY13<br />
Net sales 89,766 1,08,701<br />
Operational EBITDA 10,901 8,452<br />
Reported EBITDA 11,246 10,289<br />
EBITDA Adjusted* 12,488 11,562<br />
PBT before exceptional 3,732 597<br />
PAT Adjusted* 3,407 1,252<br />
Cash PAT* 7,089 6,352<br />
* Notes: a) Adjusted for forex losses of RS.1,278 mn in FY13 and Rs. 1,510 mn in FY12<br />
b) Exceptional item of Rs. 1,091 mn in FY13<br />
b) Cash PAT Adj = PBT before exceptionals + Depreciation – Current taxes (incl MAT<br />
credit, if any) + Post-tax Forex loss /(gain)<br />
‣ Equity dividend of Rs. 0.5/share declared; track record of dividend payments over<br />
the last five years<br />
6
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Financial highlights – Global Pipes & Plates – Continues to be strong<br />
‣ Pipes business delivers strong results backed by all-time high volumes<br />
Particulars - (In Rs. Mn) FY12 FY13<br />
Net sales 71,961 90,832<br />
Operational EBITDA 9,732 8,407<br />
Reported EBITDA 10,178 9,947<br />
EBITDA Adjusted* 11,044 11,046<br />
PBT before exceptional 4,386 2,832<br />
PAT Adjusted* 3,218 2,745<br />
Cash PAT* 7,612 8,524<br />
* Notes: a) Adjusted for forex losses of RS.1,104 mn in FY13 and Rs. 1,134 mn in FY12<br />
b) Exceptional item of Rs. 538 mn in FY13<br />
c) Cash PAT Adj = PBT before exceptionals + Depreciation – Current taxes (incl MAT<br />
credit, if any) + Post-tax Forex loss /(gain)
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Net debt/equity at a comfortable level<br />
Particulars – Rs. Mn FY12 FY13<br />
Share capital 1,139 1,315<br />
Net worth 48,816 56,578<br />
Gross debt 53,407 55,772<br />
Cash and current inv 29,686 24,537<br />
Net debt 23,721 31,235<br />
‣ Share capital increase on account of conversion of existing CCDs issued to<br />
Grenele <strong>Ltd</strong> (Apollo)<br />
‣ Net debt/equity comfortable at 0.55x<br />
‣ Debt increase mainly on account of capex and higher working capital
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Capex cycle close to completion<br />
‣ US$ 80 mn capex for US ERW mill completed<br />
‣ Remainder of Anjar Coating plant capex will be completed in FY14<br />
‣ Minimal capex going forward<br />
‣ To improve cash flows in the future which will contribute to debt<br />
reduction
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Working capital<br />
Days of sales FY12 FY13<br />
Inventory 102 84<br />
Receivables 60 57<br />
Other current assets 31 31<br />
Current assets 193 172<br />
Trade payables 130 99<br />
Other current liabilities 42 47<br />
Current Liabilities 172 146<br />
Cash conversion cycle 21 26<br />
‣ Better inventory management and strong execution results in lower inventory days<br />
‣ Payable days lower due to reduction in acceptances
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Comfortably placed for debt repayments<br />
‣ Repaid Rs. 1,700 mn of NCD<br />
‣ Repaid ECB of US$50 mn in April 2012<br />
‣ Bought back FCCB of UD$68.5 mn<br />
‣ Raised new NCD of Rs. 3,428 mn with repayments starting from FY20<br />
‣ Raised new ECB of US$100 mn with repayments starting from FY16<br />
‣ Effectively, replaced short term debt with longer term debt<br />
Debt maturing (Rs. mn)<br />
Remarks<br />
FY14 3,646 • Includes US$50 mn of ECB; already paid<br />
in April 2013<br />
FY15 9,427 • Includes US$50 mn of ECB (April ‘14) and<br />
US$81.5 mn of FCCB (October ‘14)<br />
• Sufficient cash balance<br />
• Exploring further FCCB buyback
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
OPERATIONAL SCORE CARD – PIPES AND PLATES
In '000 MT<br />
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Volume highlights - At all-time highs<br />
‣ 1.02 mn tons - All time high annual Sales<br />
‣ Sales volume growth of 22% over FY12<br />
Total Pipe Sales<br />
1200<br />
1000<br />
800<br />
695<br />
CAGR (FY09-FY13) : 10.0%<br />
816<br />
909<br />
835<br />
1,018<br />
600<br />
400<br />
200<br />
0<br />
FY 09 FY 10 FY 11 FY 12 FY 13<br />
13
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
In '000 MT<br />
Volume highlights - At all-time highs<br />
‣ 1.01 mn tons - All time high Production in a year<br />
Total Pipe Production<br />
1,200<br />
1,000<br />
800<br />
717<br />
CAGR (FY09-FY13) : 9.0%<br />
814<br />
958<br />
819<br />
1,010<br />
600<br />
400<br />
200<br />
-<br />
FY 09 FY 10 FY 11 FY 12 FY 13<br />
14
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Order book highlights – Strong visibility for next year<br />
‣ Booked orders in excess of 1 mn MT in FY13<br />
‣ Closing Order Book of 657K MT of pipes as on 1 st April 2013<br />
Pipe Order book in K MT<br />
Pipe Orders Booked<br />
Pipe Orders<br />
Executed<br />
Closing Pipe Orders<br />
Year MT (in '000 tons) MT (in '000 tons) MT (in '000 tons)<br />
FY 2008-09 807 695 781<br />
FY 2009-10 824 814 791<br />
FY 2010-11 844 909 726<br />
FY 2011-12 762 835 653<br />
FY 2012-13 1,022 1,018 657<br />
‣ Current order book at 757 K MT<br />
‣ Prospective new bids of over 4 million MT<br />
15
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Current Order book details<br />
Order book by Product<br />
ERW<br />
3%<br />
HSAW<br />
59%<br />
LSAW<br />
38%<br />
South East<br />
8%<br />
Order book by destination<br />
India<br />
20%<br />
MENA<br />
37%<br />
Americas<br />
31%<br />
Europe<br />
4%<br />
16<br />
Saudi<br />
15%<br />
Order book by source<br />
US<br />
20%<br />
India<br />
65%
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Other Operational highlights in Pipes & Plates business<br />
‣ US ERW Mill commissioned<br />
‣ Received the API certification<br />
‣ Customer accreditations ongoing<br />
‣ Saudi mill received approvals from Saudi Aramco<br />
‣ Currently, only local mill to be approved by Saudi Aramco<br />
‣ Received orders over 100K MT from the client<br />
‣ Capacity expansion of 50K tons in Spiral mill in Mandya completed,<br />
received API certification<br />
‣ Anjar Coating plant close to completion<br />
‣ Overall pipe capacity now at 2.425 mn MTPA – One of the largest line pipe<br />
players with multi-location facilities in India, Saudi Arabia and USA.<br />
‣ Plates business: Production only on need basis<br />
17
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
<strong>Welspun</strong>’s Global Reach – Serving more than 35 countries<br />
AMERICAS<br />
EUROPE & CIS<br />
Canada<br />
USA<br />
Mexico<br />
Bahamas<br />
Trinidad & Tobago<br />
Venezuela<br />
Colombia<br />
Peru<br />
Bolivia<br />
Spain<br />
Czech Rep.<br />
Tunisia<br />
Algeria<br />
Nigeria<br />
Libya<br />
Egypt<br />
Sudan<br />
Russia<br />
Iraq<br />
Qatar Iran<br />
UAE<br />
Saudi Oman<br />
India<br />
DOMESTIC<br />
China<br />
Bangladesh<br />
Myanmar<br />
Thailand<br />
Malaysia<br />
SOUTH<br />
EAST ASIA<br />
AUSTRALIA<br />
Indonesia<br />
Plant Locations<br />
Anjar, India<br />
Dahej, India<br />
Mandya, India<br />
Dammam, Saudi<br />
Little Rock, USA<br />
Marketing Offices<br />
Mumbai, India<br />
Delhi , India<br />
Dammam, Saudi Arabia<br />
Dubai, UAE<br />
Houston, USA<br />
MENA<br />
Plants<br />
Mktg Office<br />
Countries served
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Journey to become the most respected Pipe Company in the World<br />
How <strong>Welspun</strong> will sustain<br />
How <strong>Welspun</strong> reached here<br />
• Technology<br />
• Product profile<br />
• Approvals<br />
• Accreditations<br />
• Serving challenging orders<br />
• People<br />
• Zero Harm - Safety<br />
• Niche markets -deep offshore/ sour<br />
pipelines<br />
• Stringent client specifications<br />
• Local presence in key markets<br />
• Highly trained workforce<br />
• Zero Tolerance – Quality Standard<br />
Humble beginnings<br />
Today<br />
The future
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
FY13 SCORE CARD<br />
PROPOSED DEMERGER OF <strong>WCL</strong><br />
VISION & WAY FORWARD
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Rationale<br />
Key Considerations<br />
‣ <strong>WCL</strong> is a Business conglomerate with interest in – Pipes (Pipes & Plates), Steel (DRI)<br />
and Infra (Infra, O&G and Energy)<br />
‣ Each business segment has its own plans and business dynamics<br />
‣ Presently <strong>Welspun</strong> <strong>Corp</strong> business model is considered complex as multitude of business<br />
being run under the Parent company <strong>Welspun</strong> <strong>Corp</strong>.<br />
Objective<br />
‣ Simplify the business models<br />
‣ Provide flexibility to grow the different businesses with sharper focus on each of the<br />
businesses<br />
‣ Business segments with different risk-return profiles need to be aligned separately<br />
21
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Proposed Resultant Structure<br />
Promoters<br />
Public<br />
Promoters<br />
Public<br />
36% 64%<br />
36% 64%<br />
<strong>WCL</strong><br />
Listed<br />
WEPL<br />
Listed<br />
Pipes -<br />
WPI US<br />
Pipes -<br />
Saudi<br />
WNRL<br />
WITL<br />
Maxsteel<br />
WEL<br />
WIPPL<br />
AWEL<br />
WPL<br />
Leighton<br />
Pipes & Plates Business<br />
Group<br />
Infra + Steel + DRI<br />
Business Group
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Highlights of Demerger<br />
Key Parameters Resolution<br />
Appointed Date 1 st April 2012<br />
Demerged<br />
Company<br />
Resulting<br />
Company<br />
Court Scheme<br />
Jurisdiction<br />
Expected<br />
Completion<br />
Approvals<br />
Required<br />
<strong>Welspun</strong> <strong>Corp</strong> Limited (<strong>WCL</strong>)<br />
• Pipes & Plates undertaking<br />
• All other assets & liabilities including secured and unsecured loans (including outstanding<br />
ECBs and FCCBs) held at <strong>WCL</strong> level and subsidiaries related to Pipe Business<br />
<strong>Welspun</strong> Infra Enterprises Limited to be renamed as <strong>Welspun</strong> Enterprises <strong>Ltd</strong> (WEPL)<br />
• Steel undertaking (<strong>Welspun</strong> Maxsteel Limited)<br />
• Infra undertaking (Infra, O&G exploration and Energy)<br />
• Scheme of Arrangement under section 391-394 of the Companies Act<br />
• To be compliant with the “demerger” definition under Section 2 (19AA) of Income Tax Act<br />
Gujarat High court<br />
31 st January 2014<br />
• NOC from Stock Exchanges & SEBI<br />
• Shareholders Approval<br />
• Secured & Unsecured Creditors Approval
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Indicative Timeline<br />
Sr.<br />
Event<br />
Days<br />
1 Approval of the Scheme by the Board of Directors X + 0<br />
2 Application to BSE and NSE for its NOC and SEBI Observation X + 5<br />
3 Application to FIPB, RBI, etc X + 5<br />
4 Receipt of BSE/ NSE approval, SEBI Observation - (Upload the SEBI Observation and<br />
other Documents on the Company website with 24 hrs of receipt) X + 90<br />
5 Filing of an application with the High Court of Judicature at Gujarat directions to<br />
convene <strong>meet</strong>ings under Section391 of the Companies act,1956 X + 96<br />
6 Receipt of High Court Directions X + 105<br />
7 Dispatch of Notices to shareholders, secured creditors and unsecured creditors, along<br />
with Scheme and SEBI Observation Letter X + 113<br />
8 Publishing notice in newspapers informing about the <strong>meet</strong>ings X + 116<br />
9 Holding of Court convened <strong>meet</strong>ings X + 145<br />
10 Filing of Chairman's report with the High Court X + 148<br />
11 Companies to file Petition in the High Court X + 152<br />
12 Receipt of approvals from FIPB, RBI and others, if any (to confirm with the lawyers) X + 168<br />
13 High Court to admit Petition X + 175<br />
14 Petitions to be filed with Regional Director X + 182<br />
15 Receiving clearance from Regional Director X + 189<br />
16 High Court order approving scheme X + 210<br />
17 Receipt of High Court Order X + 228<br />
18 Filing of Order with ROC (Scheme Effective) X + 231<br />
19 Application for Listing X + 238<br />
20 Application for Adudication of Court Order for stamp duty X + 265
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Advisors assisting in the Demerger process<br />
Description<br />
Advisor<br />
Agency<br />
AXIS CAPTIAL<br />
Legal<br />
Amarchand Mangaldas<br />
Valuation & Share Swap Ratio<br />
Auditors<br />
Walker Chandiok & Co. (Part of<br />
Grant Thorton Network)<br />
MGB & Company
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
FY13 SCORE CARD<br />
PROPOSED DEMERGER OF <strong>WCL</strong><br />
VISION & WAY FORWARD
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Vision for <strong>WCL</strong><br />
An employer<br />
of choice<br />
The organization<br />
with highest quality<br />
standards<br />
Widen global<br />
presence<br />
A preferred business<br />
partner to all its<br />
customers and<br />
suppliers<br />
“MOST<br />
RESPECTED<br />
PIPE COMPANY<br />
IN THE WORLD”<br />
Socially responsible<br />
and sustained value<br />
creator for all its<br />
stakeholders
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Key Focus Areas– Pipes business<br />
FOCUS ON<br />
• Delivering Profitable Growth<br />
• Growing Volumes without sacrificing margins<br />
• Producing where it is cost-effective and selling where it is most profitable<br />
BETTER MARKETING FOCUS<br />
• Targetted focus on delivering quality products and services to the customers<br />
• Organisation structure reworked in order to be closer to the customer<br />
• Enhancing market share in our strong turf – North America, Middle East and India<br />
• Increase market share in relatively new geographies - Latin America, Europe and<br />
North Africa<br />
MINIMAL CAPEX GOING FORWARD<br />
• All planned capex completed or close to completion<br />
• No new growth capex unless clear medium-term visibility<br />
• No plans for new greenfield plants; any new venture will be brown field with<br />
potential shifting of existing plant
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Status and Way forward for each businesses in WEPL<br />
‣ Infra business<br />
‣ Transfer of Infra EPC business to Leighton <strong>Welspun</strong> (LWIN)<br />
‣ Received 7.5% stake in LWIN as consideration<br />
‣ <strong>Welspun</strong> group stake in LWIN rises to ~40% from 35%<br />
‣ Consolidation of EPC completed; synergy benefits to improve performance<br />
‣ Self-sufficient business to <strong>meet</strong> its commitments and liabilities<br />
‣ BOT business fully operational with positive cash flows after servicing debt<br />
obligations<br />
‣ Extremely cautious on bidding for new projects
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Status and Way forward for each businesses in WEPL<br />
‣ Maxsteel business<br />
‣ No interest and loan repayment obligation till September 2014<br />
‣ Gas situation likely to improve with new gas finds by Reliance in KG-D6<br />
‣ Reliance price negotiation with government in advance stage; increase in APM<br />
price likely to improve gas availability<br />
‣ Exploring options of alternative gas through producer gas plants which can cater<br />
to 40% of gas requirement at an average price of ~US$ 7/MMBTU with net capex<br />
of Rs. 1,200 mn<br />
‣ Mott MacDonald already carried out techno-economic study for the PGP<br />
price and the results are encouraging<br />
‣ Oil & gas exploration<br />
‣ No new acreages
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Status and Way forward for each businesses in WEPL<br />
‣ Energy business<br />
‣ One of the largest renewable energy players in India<br />
‣ Largest solar energy capacity in India<br />
‣ Operational capacity of 130 MW in FY13<br />
‣ Operational capacity expected to rise to ~400 MW by 2014<br />
‣ Solar business already profitable<br />
‣ Project locations across six states
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
On The Path of Global Leadership…<br />
Thank You
<strong>Welspun</strong> Group | <strong>Welspun</strong> <strong>Corp</strong> <strong>Ltd</strong><br />
Contacts<br />
For further details, please contact:<br />
Akhil Jindal<br />
Director – Group Finance and Strategy<br />
Email: akhil_jindal@welspun.com<br />
Harish Venkateswaran<br />
GM - Group Finance and Strategy<br />
Email: harish_venkateswaran@welspun.com<br />
Company Website: http://www.welspuncorp.com