Annual Report FY 2009-10 - Welspun

th15 Annual Report 2009-10Welspun's Highlights• Expansion Plans :The increase in the global demand for pipes has led us to embark upon an expansion plan to add another 0.55 mn tonnes of linepipe to its existing capacity of 1.5 mn tonnes. The total outlay for the expansion has been marked at Rs 7 bn. Post expansion LSAWcapacity will increase to 0.70 mn tonnes from the current 0.35 mn tonnes and similarly HSAW capacity will increase to 1.1 mntonnes from the current 0.9 mn tonnes. Commercial production is expected to commence by the end of FY11. Proposedinvestment in Middle East facility with HSAW capacity of 0.27 mn tonnes. The Final capacity would be as under:(in ‘000 metric tonnes)LOCATIONDAHEJ ANJAR OTHER INDIA U.S. MIDDLE EAST TOTALPRODUCT(Proposed)LSAW (Existing) 350 350LSAW (New) 350 350LSAW(Total) 350 350 700HSAW (Existing) 50 500 350 900HSAW (New) 200 270 470HSAW(Total) 50 500 200 350 270 1,370HFIW / ERW 200 200TOTAL PIPES 400 1,050 200 350 270 2,270PLATES/COILS 1,500• Entering new markets in IndiaAs discussed above, in view of domestic opportunities, the Company is expanding it's HSAW capacity by 0.2mn tonnes bysetting up two manufacturing facilities each of 0.1 mn tonne in Bangalore and another at Central India respectively. Thefirst mill is expected to become operational by H1 FY11. The spiral plant will be located in Mandya near Bangalore in SouthernIndia and will cater largely to the needs of the water segment. The second plant is expected to become operational by the end ofFY11, which will be located at Central India and will cater to the oil & gas segment. With the increased capacities, we arewell poised to tap the opportunities arising from the domestic market as well as the international market.• Strong order book positionThe order book has around 90% export orders with major part from premium market of North America. The current order bookstands at Rs. 64,300 Mn (US$ 1.3 bn) (as at 27th April 2010) which includes orders for both pipes and plates.• Enhanced visibility for new ordersAcccording to the current scenario there shall be an improvement in demand for pipes from the US, Europe and the Middle East.The Company is currently participating in several bids, both globally and domestically.• Plate cum Coil Mill:The Plate prices used to command higher premium over the slab prices over the years. During FY 09-10, the prices of the slab havemoved up but plate prices yet to see recovery as demand for plates from shipping industry and other applications (heavyconstruction, bridges, boiler plates, wind mill blade and others) is yet to recover. However, we are poised to manage the volumegrowth by bagging new orders from external clients in the domestic and international market. We have created a pool of trainedmanpower for producing API grade plates and are optimistic of improving the performance going forward. The initiative taken toopen 12 depots in major cities is helping to enhance the reach to the OEM's and trade sales. During the year we have supplied APIgrade plates to external customers, which establishes our ability in the international market.34