Welspun Corp Limited · NSE:WELCORP
Welspun — Investor Presentation (August 2011)
46 slides from Welspun's investor presentation, August 2011
Slide 1: On The Path of Global Leadership
On The Path of Global Leadership… WELSPUN CITY, ANJAR August 2011 Page 1
Slide 2: Disclaimer
Disclaimer Certain 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 d
Slide 3: Welspun Group
Welspun Group Global Recognitions Brief Synopsis Welspun India “ Outstanding CSR in Textiles Sector” • One of the fastest emerging global groups, with multiple India Shining CSR Award - Wockhardt Group 2011 countries strategy and manufacturing facilities • Group companies enjoys market leadership po
Slide 4: WCL – An Introduction
WCL – An Introduction • WCL, flagship company of Welspun Group, is one of the largest pipe manufacturing company in the world Steady Growth in Revenues and Profit Consolidated Total Revenues • Incorporated in 1995, the Company offers a complete range (INR MM) CAGR (07-11): 31.5% of high grade line p
Slide 5: WCL – An Introduction: Corporate Structure
WCL – An Introduction Promoters (41.05%) Welspun Corp Limited (WCL) Public and Others (58.95%) WCL – 100% WCL – 100% WCL – 26% Welspun Plate and Coil Mill Welspun Natural Resources Corporate Structure Welspun Pipes Inc, USA Division Welspun Energy Ltd Pvt. Ltd. Manufacturer of state-of-art Solar & R
Slide 6: WCL – An Introduction: Corporate Structure
……WCL – An Introduction Promoters (41.05%) Welspun Corp Limited (WCL) Public and Others (58.95%) Corporate Structure WCL – 87.5% Welspun MaxSteel Ltd Steel ( DRI ) / Products Forward Integration - Steel Slab Plant - Capacity : DRI (Sponge Iron- Gas based) : 0.9mn MTPA being enhanced o 1.7 mn mtpa at
Slide 7: Growth at Infinity
Growth at Infinity 8 Growth Revenue - 350,000 tons LSAW pipe capacity Trial Production Rs. 17,457 mn. Q1 FY12 started Saudi Plant - capacity of 300,000 MT operational Rs. 80,236 mn. 2011 100,000 tons HSAW Plant in Karnataka operational Foray into infra & pipe laying for O&G and Rs. 73,637 mn. 2010 w
Slide 8: Strong Value & Growth Story
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 Welspu
Slide 9: 1. Strong Industry Fundamentals
1. Strong Industry Fundamentals Relatively Few Major Players International Demand Outlook till 2016 Share of Expected Demand (% for MT) Until 2016 • Industry is highly capital intensive with high barriers to entry Business Total Potential • Niche markets exist which have been effectively Length Quan
Slide 10: 1. Strong Industry Fundamentals: Outlook
1. Strong Industry Fundamentals Outlook Rising oil and gas exploration will further provide impetus to the business. India is preparing construction of pipelines as the domestic gas availability is poised to increase two-fold over the years. With the oil prices remaining high there have been a p
Slide 11: 2. Robust Business Fundamentals & Healthy Order Book
2. Robust Business Fundamentals & Healthy Order Book Going Strength to Strength Strongly Positioned Current Capacities • Welspun serves several marquee „000 MT pa FY07 FY09 FY10 FY11 2,200 customers like Exxon Mobil (Golden 350 Oil & Gas Co 36 >50 >50 >55 Approval Pass Pipeline), Kinder Morgan, Ruby
Slide 12: World's best High-end LSAW players
2. Robust Business Fundamentals & Healthy Order Book 2011 Global best Corus World‟s best LSAW Players LSAW Players Welspun Europipe High –end LSAW players Japanese, ILVA 2007 with global sales Players capable of mfg > High-end LSAW 48” OD, > 30mm WT, Players 13 Players globally X80 and sour grades 2
Slide 13: Welspun's Competitive Positioning: HSAW - Regionwise
2. Robust Business Fundamentals & Healthy Order Book WELSPUN’S COMPETITIVE POSITIONING: HSAW - REGIONWISE North America Domestic Little Rock Middle East Dammam Anjar Dahej Mandya Africa Latin America Plants Regions covered Regions under focus August 2011 Page 13
Slide 14: Long Term Sustainance
2. Robust Business Fundamentals & Healthy Order Book LONG TERM SUSTAINANCE How Welspun will sustain How Welspun reached here Moving to niche markets like deep offshore and sour pipelines market Client specifications and requirements getting challenging every day which is an advantage Technology f
Slide 15: Key Growth Factors for Welspun
2. Robust Business Fundamentals & Healthy Order Book KEY GROWTH FACTORS FOR WELSPUN Welspun‟s 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
Slide 16: Welspun's Value Chain (from Slabs to Pipes)
2. Robust Business Fundamentals & Healthy Order Book Process Process Process Steel Slab Steel Plates/ Pipes Raw Steel (API Grade) Coils (API Grade) (API Grade for O&G) Selling Price (1): Selling Price (1): Selling Price (1): $ 850- 900 /ton. $ 1,000-1,050 /ton. $ 1,300-1,400/ton. Welpsun’s Value Cha
Slide 17: Pipe Orders
2. Robust Business Fundamentals & Healthy Order Book Pipe Orders Booked During Year / Qtr Orders Executed Closing Pipe Orders MT MT MT Year (in '000 tons) (in '000 tons) (in '000 tons) FY 2008-09 807 695 781 FY 2009-10 824 814 791 FY 2010-11 844 909 726 Q1 FY 2011-12 116 203 640 Current Order (Pipes
Slide 18: Global Footprint & Pre Approved with Oil & Gas Majors
3. Global Footprint & Pre Approved with Oil & Gas Majors Global Market Expansion World’s largest diameter steel pipe producers(1) 2007 output (million tonnes) Salzgitter/Europipe* (Germany) 1.3 Iraq Saudi Arabia Welspun (India) 1.0 Spain JFE (Japan) 0.7 Russia Canada Venezuela Sumitomo (Japan) 0.7 U
Slide 19: Global Footprint & Pre Approved with Oil & Gas Majors
3. Global Footprint & Pre Approved with Oil & Gas Majors AGIP NTPC BECHTEL ONGC BRITISH GAS PETRO CHINA Accreditation Process BRITISH PETROLEUM PETRONAS, MALAYSIA CHINA NATIONAL PETROLEUM CORPORATION PDO, OMAN A significant entry barrier CPMEC, CHINA PGN, INDONESIA CHEVRON (Framework Agreement) PTTE
Slide 20: Strong Management Team with Proven Execution Capabilities
4. Strong Management Team with Proven Execution Capabilities Management Team Mr. B.K. Goenka is the Chairman, and the chief architect Mr. Asim Chakraborty is Executive Director and Plant Head of the Welspun Group. Today, with his entrepreneurial of the Anjar facility. A Civil Engineer from the Unive
Slide 21: LSAW, HSAW, ERW Pipes and Coating
4. Strong Management Team with Proven Execution Capabilities LSAW Pipes ERW Pipes HSAW Pipes Coating of Pipes August 2011 Page 21
Slide 22: Plates and US Plant
4. Strong Management Team with Proven Execution Capabilities Plates Plates US Plant August 2011 Page 22
Slide 23: US Plant
4. Strong Management Team with Proven Execution Capabilities US 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 th
Slide 24: Saudi Plant
4. Strong Management Team with Proven Execution Capabilities Saudi 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
Slide 25: 5. Exponential Growth in Revenues & Margins
5. Exponential Growth in Revenues & Margins Sales (volume) Consolidated Revenues (1) („000 MT) (INR MM) CAGR (06-11): 20.5% 909 CAGR (06-11): 34.4% 814 850 695 100,000 641 80,236 650 73,503 501 485(#) 75,000 (#) 57,395 450 371 387 50,000 39,945 (#) 203 (#) 26,834 250 154 115 25,000 18,298 17,457 50
Slide 26: EPS, ROCE and ROE
5. Exponential Growth in Revenues & Margins EPS (Rs./Share)(Diluted) 35 CAGR (06-11): 46.6% 28.4 28.7 28 21 18.3 14 11.5 8.7 7 4.2 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 ROCE and ROE (%) August 2011 Page 26
Slide 27: Consolidated Balance Sheet: Sources of Funds
5. Exponential Growth in Revenues & Margins Consolidated Balance Sheet (Rs. Mn.) FY2009 FY2010 FY 2011 Change Sources of Funds Shareholders' Funds Share Capital 932 1,022 1,023 2 Reserves and Surplus 14,664 27,990 33,672 5,682 15,597 29,011 34,695 5,684 Minority Interest 0 0 2,024 2,023 Foreign Curr
Slide 28: Consolidated Balance Sheet: Application of Funds
5. Exponential Growth in Revenues & Margins Consolidated Balance Sheet (Rs. Mn.) FY2009 FY2010 FY 2011 Change Application Of Funds - Fixed Assets - Gross Block 34,844 38,810 46,756 7,946 Less:Depreciation/Amortisation/Impairment 3,847 5,889 8,683 2,795 Net Block 30,996 32,921 38,072 5,151 Capital Wo
Slide 29: Q1 FY 2011-12 Highlights
Breakdown of Production and Sales in Metric Tonnes (MT) Q1 FY 2011-12 Highlights Major Highlights in Q1 FY12 Vs Q4 FY11 Summary of FY11 (Rs. Million) • Sales for the quarter stood at Rs 17,457 million incorporating Particulars Q1 FY12 Q4 FY11 Change % Pipe volume of 202,544 MT and Plates volume 114,
Slide 30: Summary
Summary 1 Strong Industry Fundamentals • Capital intensive, high barriers to entry • North America expected to lead demand Robust Business 5 Exponential Growth in 2 Fundamentals Revenues & Margins & Healthy Order Book • Revenues have grown at a • Strong volume growth CAGR of 34.4% over the last • Or
Slide 31: Welspun on the Path of Global Leadership
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 Adopt and innovate cutting-edge technology to satisfy stringent Leaders
Slide 32: Welspun Maxsteel Limited (WMSL)
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 Forward integration to Steel Slab – Project ready for launch August 2011 Page 32
Slide 33: WMSL - An Introduction
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) – Eng
Slide 34: WMSL: Ready Infrastructure
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 draf
Slide 35: WMSL: Input Linkages
WMSL : Input Linkages Long term linkages for key raw materials Iron & Pellets Lump Ore with NMDC Pellets with GIIC, Vale GAIL - APM Gas Reliance Allocation GAIL A Tranche RLNG August 2011 Page 35
Slide 36: WMSL - Marquee Customers
WMSL - Marquee Customers NATIONAL STEEL CORPORATION, PHILLIPINES PT Ispat, Indonesia Vardhman THE INDIAN SMELTING Special Steels 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
Slide 37: Steel Slab Expansion Project
Steel Slab Expansion Project August 2011 Page 37
Slide 38: Rationale for expansion Project to meet WCL's captive requirement
Rationale for expansion Project to meet WCL‟s captive requirement… • Backward integration need of the hour • WCL has 1.5 MTPA Plate-Coil Mill and 2.2 MTPA of Pipe capacity • WCL‟s customers have stringent quality requirements and provide Zero Tolerance for errors • Backward integration will ensure c
Slide 39: Rationale for expansion Project to meet WCL requirement
Rationale for expansion Project to meet WCL requirement… • Timely delivery of Raw materials to lower the lead time of delivery • Significant saving in transportation costs of Slabs from WMSL to Anjar facility of WCL – Most of the Steel Slab manufacturers are located in Brazil and Mexico – Inventory
Slide 40: Expansion Project
Expansion Project Particulars Additional Capacity From 0.9 mn MTPA to Sponge Iron 1.7 mn MTPA Steel Slab 1.5 MTPA Captive Power Plant 330-350 MW • Steel Slab to use Electric Arc Furnace (EAF) Technology • API grade steel slabs • The Project has achieved financial closure • Major Approvals received A
Slide 41: Approvals in Place
Approvals in Place Mega Project MOU signed with State Government for the status of Mega Project. MoU Company has been granted various fiscal & non fiscal incentives. Grid Approval received from MSEDCL/MSETCL for 400 KV grid Connectivity connection. Bombay Tenancy & Agriculture Act permission
Slide 42: Process flow chart – steel making
Process flow chart – steel making DRI - EAF OPERATION EAF DRI Twin LF Twin VD CCM August 2011 Page 42
Slide 43: Gas based DRI best suited for quality steel making
Gas based DRI best suited for quality steel making Two Routes • Gas Based – HYL & Midrex • Coal Based – LURGI , SL/RN etc. Typical Analysis Parameters Gas based HBI/DRI Coal based DRI Fe(T) 93 - 94% 90 - 91% FE(M) 86 - 88% 80 - 82% Carbon 1 - 2%* 0.1 – 0.3% Sulphur 0.008 – 0.010% 0.020 – 0.050% Phos
Slide 44: Investment in WMSL
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 o
Slide 45: Capturing the Entire Value Chain – Multifold Benefits
In Effect : Capturing the Entire Value Chain – Multifold Benefits Proposed Steel Slab Plant to feed Plate Mill SLABS Refined API grades upto X-120 O&G pipes Steel Plates/ & alloyed Weldox & Hardox grades Offshore Wind tower Coils liquid Steel Boiler Plate grades Engineered products Ship Building & o
Slide 46: Thank You
Thank You For further details, please contact: Akhil Jindal Navin Agarwal Director - Corporate Affairs VP - Corporate Affairs Email: akhil_jindal@welspun.com Email: navin_agarwal@welspun.com Company Website: http://www.welspuncorp.com August 2011 Page 46