Welspun Enterprises Ltd. · NSE:WELENT
Welspun Enterprises — Investor Presentation (November 2018)
45 slides from Welspun Enterprises's investor presentation, November 2018
Slide 1: Welspun Enterprises Ltd: An Infra Player with a Difference
WELSPUN ENTERPRISES LTD An Infra Player with a Difference November 2018 Actual photo of Delhi-Meerut Expressway; completed in record 19 months vs. scheduled 30 months 1
Slide 2: Safe Harbor
SAFE HARBOR The information contained in this presentation is provided by Welspun Enterprises 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
Slide 3: Key Investment Highlights
WELSPU ribald ld ES KEY INVESTMENT HIGHLIGHTS Welspun Group Hybrid Annuity comes with vast experience of Model (H AM) - Nurturing businesses . -Executing marquee projects Sunrise Road Sector pen y - Investing & timely value ~ Rs. 5.35 Trillion of road government & developer unlocking projects to be
Slide 4: Key Investment Highlights: Welspun Group
Ai 0“: / | imme bd t ad oo PRISES KEY INVESTMENT HIGHLIGHTS Welspun Group comes with vast experience of - Nurturing businesses -Executing marquee projects - Investing & timely value unlocking
Slide 5: Welspun Group Overview
WELSPUN GROUP OVERVIEW FY18 Revenue FY18 EBITDA Asset Base Rs. 152 bn Rs. 22 bn Rs. 198 bn Asset creation calibrated to CAGR 21% (1995-2018) Overall 15% EBITDA margin Demand & Cash flows Net Debt of Rs. 30 bn Strong Credit Rating 25,000+ Employees Welspun India: AA Continuous focus on reducing high
Slide 6: Group's Rich Experience of Project Execution
GROUP’S RICH EXPERIENCE OF PROJECT EXECUTION History of designing & building manufacturing plants & projects worth USD 3 bn+ Successfully built Anjar Welspun City, spread across 2,500 acres in Gujarat Built renewable energy portfolio of 1,000+ MW worth Rs.10,000+ crores & successfully divested it Tr
Slide 7: Key Investment Highlights: Sunrise Road Sector
ji = an imme bd t ad oo PRISES KEY INVESTMENT HIGHLIGHTS Sunrise Road Sector ~ Rs. 5.35 Trillion of road projects to be awarded in next 5 years
Slide 8: Road Sector with Strong Thrust from Government
ROAD SECTOR WITH STRONG THRUST FROM GOVERNMENT Road Infrastructure a vital ingredient for country’s GDP growth Only ~5% 8.1% of GDP 8x Multiplier effect Employment of Indian Roads are As per IMF, required Investment in roads Local employment national / state spend on Infra in has multiplier impact g
Slide 9: Future Potential Provides Huge Bidding Opportunity
FUTURE POTENTIAL PROVIDES HUGE BIDDING OPPORTUNITY ~Rs. 5.35 Trillion India Ranks 66 / 137 34,800 kms Road projects expected to India’s infrastructure rank, while Bharatmala project total be awarded in next 5 years improved from Rank#87 in 2015, still construction target by 2022 has a long way to go
Slide 10: Potential Under Buy & Turnaround Strategy
POTENTIAL UNDER BUY & TURNAROUND STRATEGY Several HAM projects awarded to various infra players with weaker balance sheet are not financially closed… ….Welspun Enterprises with its strong banking relationship backed with strong balance sheet sees this as an opportunity to be a Turnaround Specialist
Slide 11: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 11
Slide 12: NHAI Hybrid Annuity Model (HAM) Introduced in 2016
For details refer appendix NHAI HYBRID ANNUITY MODEL (HAM) INTRODUCED IN 2016…. ….to overcome BOT issues including Land Acquisition Change of scope Traffic changes Toll Risk Financing ….thus, now NHAI awarding projects under HAM and pure EPC. HAM advantageous to both Developer & Authority NHAI as a
Slide 13: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 13
Slide 14: WEL Robust HAM Portfolio with Operational Excellence
For details refer appendix WEL ROBUST HAM PORTFOLIO OF Rs. 85+ BILLION WITH…. ….Order book of Rs. 67 Billion# Book-to-bill of ~5 times; Visibility of doubling Net Cash position… revenue each year for FY19 & FY20 OPERATIONAL EXCELLENCE Cash for Growth Capital Experience of operating FINANCIAL STRENGT
Slide 15: Strong Platform Set for Future Growth
STRONG PLATFORM SET FOR FUTURE GROWTH Continuously building HAM portfolio through bid / buy strategy for profitable growth Current order book at ~Rs. 67 Billion# As on Nov-18 As on Mar-17 EPC of HAM: 5.2 bn Other EPC: 0.2 bn EPC of HAM Projects EPC of HAM: 66.6 bn Other EPC Other EPC: 0.4 bn # EPC p
Slide 16: Operating Leverage to Improve Margins
OPERATING LEVERAGE TO IMPROVE MARGINS Q2FY19 revenue contributed by 3 HAM projects as against one in last year Margin improvement as fixed cost absorption increased with higher execution on multiple projects Revenues and Operating EBITDA (Rs. Million) Revenues Operating EBITDA Operating EBITDA Margi
Slide 17: With Undivided Focus on Shareholder Value Creation
WITH UNDIVIDED FOCUS ON SHAREHOLDER VALUE CREATION Shareholding Pattern (as on 30th Sept 2018) Market Cap (Rs. Million) 45.98% 20,812 46.04% 18,419 Promoter Management 12,313 FIIs Banks and Insurance Cos 8,222 Mutual funds Public 31 Mar 16 31 Mar 17 31 Mar 18 30 Sep 18 0.46% 0.81% 4.30% 2.41% Market
Slide 18: Through an Experienced Board and Management
THROUGH AN EXPERIENCED BOARD AND MANAGEMENT Board of Directors Management Team B.K.Goenka, Chairman Sandeep Garg, Managing Director & CEO, Member of Board • Amongst India’s most dynamic businessmen • Harvard Graduate with 30+ years experience in diverse roles in infrastructure • Ranked amongst India
Slide 19: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 19
Slide 20: One of Its Kind Asset Light Model
ONE OF ITS KIND ASSET LIGHT MODEL Undertakes only Focus only on Asset exits High Value Added Minimal EPC Assets HAM at Premium PMC Leverages balance sheet Construction completely Minimal Plant & Continuous unlocking of strength & financial outsourced. Project Machinery; no investment capital from as
Slide 21: Creating Value Through a Profound Strategy
CREATING VALUE THROUGH A PROFOUND STRATEGY 1 2 3 4 Bid for differentiated Achieve early Award construction to Project Management HAM projects/ financial closure best suited sub- Consultancy Buy distressed HAM contractor projects • Reduce execution risk • Lower competition • Strong Balance Sheet • Ri
Slide 22: Delhi Meerut E-Way: Validating Our Differentiated Strategy
DELHI MEERUT E-WAY: VALIDATING OUR DIFFERENTIATED STRATEGY Project Under the Aegis of Prime Minister of India Narendra Modi and NHAI Laying of foundation stone Inauguration of completed project India’s FIRST 14-Lane Expressway India’s FIRST Green Expressway India’s FIRST HAM project to achieve finan
Slide 23: Appreciation by Prime Minister of India Shri Narendra Modi
APPRECIATION BY PRIME MINISTER OF INDIA SHRI NARENDRA MODI 23
Slide 24: Appreciation by Shri Nitin Gadkari, Union Minister
APPRECIATION BY SHRI NITIN GADKARI, UNION MINISTER 24
Slide 25: Building Much More Than an Expressway
BUILDING MUCH MORE THAN AN EXPRESSWAY Vertical garden developed along the entire bridge 40,000+ Trees transplanted and retained existing trees 3,230 Solar Panels Beautification Initiatives Electrification through solar power Wall art & replicas of famous monuments of 1050 kWp 25
Slide 26: Welspun Enterprises CSR Initiatives
WELSPUN ENTERPRISES CSR INITIATIVES Working with communities through diverse social interventions to secure stable & sustainable futures Community Healthcare Potable Water Supply Promoting Education Initiatives Initiatives Initiatives Weekly health check-up camps Distribution of Potable Water
Slide 27: Financials
WY WELSPUN ENTERPRISES INFRASTRUCTURE AND ENERGY FINANCIALS
Slide 28: Income Statement Snapshot - Standalone
INCOME STATEMENT SNAPSHOT - STANDALONE Income Statement Snapshot (Rs. Million) YoY YoY Particulars Q2 FY19 Q2 FY18 H1 FY19 H1 FY18 Growth Growth Revenue from Operations 2,498 1,415 77% 5,968 3,419 75% Other Income* 249 254 -2% 427 488 -12% Total Income 2,747 1,669 65% 6,395 3,906 64% Operating EBITD
Slide 29: Balance Sheet Snapshot - Standalone
BALANCE SHEET SNAPSHOT - STANDALONE Balance Sheet Snapshot (Rs. Million) 30th Sept 2018 31st Mar 2018 Net worth 15,013 14,573 Gross Debt 545 664 Cash & Cash Equivalents@ 6,062 7,135 Net Debt /(Cash) (5,517) (6,471) Other Long Term Liabilities 299 303 Total Net Fixed Assets (incl. CWIP) 280 87 Net Cu
Slide 30: Key Highlights
KEY HIGHLIGHTS Well Positioned to Benefit from India’s Economic Growth & Development Unique Position with Strong Financials and Robust Credit Rating to tap Infra Opportunities Strong Order book with visibility of doubling revenue each year for FY19 & FY20 Asset light business model in Infra with reg
Slide 31: Way Forward
WAY FORWARD Continue approach of prudent bid/buy strategy to strengthen HAM portfolio Targeting projects where differentiation is possible Tapping opportunities in State road HAM projects on a selective basis Divest/securitise completed projects in order to unlock value and capital Looking at opport
Slide 32: Thank You
THANK YOU For further details, please contact: Harish Venkateswaran AVP - Group Finance and Strategy Email: harish_venkateswaran@welspun.com 32
Slide 33: Appendix
WY WELSPUN ENTERPRISES INFRASTRUCTURE AND ENERGY APPENDIX
Slide 34: NHAI Hybrid Annuity Model (HAM) Overview
NHAI HYBRID ANNUITY MODEL (HAM) OVERVIEW Award criterion: Lowest NPV value based on Construction cost and O&M cost, quoted by the bidders Returns to Concessionaire on Capital Arranged - Annuity payments (biannually) till end of concession period as per predetermined schedule - Interest payments (on
Slide 35: HAM Better Than BOT
HAM BETTER THAN BOT BOT Toll HAM Traffic Risk Risk borne by concessionaire No risk on the concessionaire Risk with concessionaire as tariffs decided Toll Tariff Rates No risk on the concessionaire as per National Tariff Policy Higher Lower Equity Requirement (25-30% of project cost) (12-15% of proje
Slide 36: Welspun Enterprises Infrastructure Portfolio
WELSPUN ENTERPRISES INFRASTRUCTURE PORTFOLIO HAM PROJECTS Delhi-Meerut Expressway (Pkg 1) Gagalheri-Saharanpur- Chutmalpur-Ganeshpur (CGRG) Yamunanagar (GSY) Authority: NHAI Authority: NHAI Authority: NHAI Status: Completed Status: Under Construction Status: Under Construction Inaugurated by PM 1 2
Slide 37: HAM: Delhi-Meerut Expressway Package 1
1 HAM: DELHI-MEERUT EXPRESSWAY PACKAGE 1 Scope: 14 Lane expressway: Six-laning of Delhi – Meerut PROJECT DETAILS Expressway & four-laning either side from 0th km to existing Project Length (Kms) 8.716 Km km 8.4 of NH-24 in Delhi Award Date Jan 2016 Status: Record completion within 19 months. Receive
Slide 38: HAM: Gagalheri-Saharanpur-Yamunanagar
2 HAM: GAGALHERI-SAHARANPUR-YAMUNANAGAR Scope: 4-Laning of Gagalheri-Saharanpur-Yamunanagar PROJECT DETAILS section of NH-73 in UP / Haryana Project Length (Kms) 51.5 Km Status: NHAI declared the Appointed Date for the Project Acquisition Date Jan 2018 as 26th January 2018; execution in full swing F
Slide 39: HAM: Chutmalpur-Ganeshpur & Roorkee-Chutmalpur-Gagalheri
3 HAM: CHUTMALPUR-GANESHPUR & ROORKEE-CHUTMALPUR-GAGALHERI Scope: 4-Laning of Chutmalpur-Ganeshpur section of NH- PROJECT DETAILS 72A & Roorkee-Chutmalpur-Gagalheri section of NH-73 in UP Project Length (Kms) 53.3 Km & Uttarakhand Acquisition Date Jan 2018 Status: NHAI declared the Appointed Date as
Slide 40: HAM: Aunta-Simaria
4 HAM: AUNTA-SIMARIA (Ganga Bridge with Approach Roads) Scope: Six- Laning from Aunta-Simaria (Ganga Bridge with PROJECT DETAILS Approach Roads) Section from km 197.9 to km 206.1 of NH- 31 in Bihar. Includes widest extradosed bridge on Ganga Project Length (Kms) 8.15 Km river Award Date Aug 2017 Fin
Slide 41: HAM: Chikhali-Tarsod
5 HAM: CHIKHALI-TARSOD Scope: 4-laning of Chikhali – Tarsod (Package-IIA) section PROJECT DETAILS of NH-6 from km 360.0 to km 422.7 in Maharashtra Project Length (Kms) 62.7 Km Status: Financial closure achieved; appointed date is Acquisition Date Jan 2018 expected in Q3FY19; site mobilised and devel
Slide 42: HAM: Sattanathapuram - Nagapattinam
6 HAM: SATTANATHAPURAM - NAGAPATTINAM Scope: 4 laning of Sattanathapuram to Nagapattinam PROJECT DETAILS (Design Ch Km 123.8 to Km 179.6) section of NH-45A (New Project Length (Kms) 55.755 Km NH -332) in Tamil Nadu Award Date July 2018 Status: Received Letter of Award (LoA) in July 2018; Post CA sig
Slide 43: HAM: Package No. AM 2
7 HAM: PACKAGE NO. AM 2 Scope: Upgradation of Roads in Maharashtra State or Two PROJECT DETAILS Laning Road/ Two Laning Road with paved shoulder under Project Length (Kms) 352.15 Km MRIP Package on Hybrid Annuity Mode (HAM) Package No. AM 2. Award Date Nov 2018 Financial Closure Post CA signing Key
Slide 44: Existing BOT Projects Summary
EXISTING BOT PROJECTS SUMMARY Experience & expertise of successfully operating water project and 500+ kms of roads (Rs. Mn) Value on Debt on Concession Sector Project Name Location books books COD End (March-18) (March-18) Highways Himmatnagar Bypass Gujarat 13 - Apr-06 Jun-20 Water Supply Dewas Wat
Slide 45: Investment in Oil & Gas Blocks: Potential Value Accretion
INVESTMENT IN OIL & GAS BLOCKS: POTENTIAL VALUE ACCRETION Adani Welspun Exploration Ltd (AWEL), a 65:35 JV between Adani Group & WEL, is the key investment vehicle AWEL WEL Effective Block Name Location Status Stake Stake Mumbai AWEL has decided to execute Phase – II of the MB-OSN-2005/2 100% 35% Hi
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