Welspun Enterprises Ltd. · NSE:WELENT
Welspun Enterprises — Investor Presentation (February 2020)
48 slides from Welspun Enterprises's investor presentation, Feb 13, 2020
Slide 1: Filing cover letter to stock exchanges
WELSPUN ENTERPRISES INFRASTRUCTURE AND ENERGY WEE /SEC/2020 February 13, 2020 To, BSE Limited National Stock Exchange of India Limited 1st Floor, Rotunda Bldg. Exchange Plaza, C-i, Block-G, Dalal Street, Fort, Bandra Kurla Complex, Bandra (East), Mumbai 400 001. - Mumbai -400 051. Scrip Code: 532553
Slide 2: Welspun Enterprises Ltd: An Infra Player with a Difference
WELSPUN ENTERPRISES LTD An Infra Player with a Difference February 2020 Actual photo of Delhi-Meerut Expressway; completed in record 19 months vs. scheduled 30 months 1
Slide 3: 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 4: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS WELSPUN ENTERPRISES INFRASTRUCTURE AND ENERGY Welspun Group comes with vast experience of - Nurturing businesses -Executing marquee projects - Investing & timely value unlocking sector NIP Welspun Enterprises - Focused purely on HAM - Robust order book provides strong visib
Slide 5: Key Investment Highlights: Welspun Group
Li . “jz!” | bi Were ENTER , R ! s E s Ll KEY INVESTMENT HIGHLIGHTS Welspun Group comes with vast experience of - Nurturing businesses -Executing marquee projects - Investing & timely value unlocking
Slide 6: Welspun Group Overview
WELSPUN GROUP OVERVIEW FY19 Revenue FY19 EBITDA Fixed Asset Base Rs. 185 bn Rs. 25 bn Rs. 61 bn Asset creation calibrated to CAGR 21% (1995-2019) Overall 13% EBITDA margin Demand & Cash flows Net Debt of Rs. 32 bn Strong Credit Rating 25,000+ Employees Welspun India: AA Continuous focus on reducing
Slide 7: 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 8: Key Investment Highlights: Sunrise Infra Sector
ji = an Ween WELSPUN ENTERPRISES Ll KEY INVESTMENT HIGHLIGHTS Sunrise Infra Sector ~ Rs. 102 trillion capital expenditure in infrastructure sector during FY2020-25 due to NIP
Slide 9: Road Sector to Get Strong Thrust from Government
ROAD SECTOR TO GET STRONG THRUST FROM GOVERNMENT Sector wise break up of Capex in Sector wise share in the NIP for NIP during FY20 25 Road sector Rs 102 trillion 7% 8% 25% 24% 8% 39% 3% 16% 19% 13% 36% 1% 1% Energy Roads Railways Centre State Private Ports Airports Urban Digital communication Irriga
Slide 10: Vision 2025
Vision 2025 NH total length 200,000 km; expressways 10% of total NH (20,000 km) in major economic corridors Strategic areas and major tourist destinations Significantly higher share of the private sector in NH Last mile connectivity improve access to remote areas Annual phasing of investments (Rs mn
Slide 11: 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 12: Water Sector – Key Focus Area in Modi 2.0
WATER SECTOR – KEY FOCUS AREA IN MODI 2.0 Government’s Mission: ‘Nal se Jal’ Target of providing 100% piped water to all households by 2024 (from current 18%) Investments in water area to double in the Major Project cost likely to be distributed next 5 years (Rs. Bn) amongst Pumps and ~6,000 Valves
Slide 13: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 12
Slide 14: NHAI Hybrid Annuity Model (HAM) Introduced in 2016
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 partner At least 80% land 1
Slide 15: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 14
Slide 16: Robust HAM Portfolio and Operational Excellence
ROBUST HAM PORTFOLIO: Rs. 85+ BILLION, 590+ KM WITH…. ….Order book of Rs. 41 Billion# Robust order book provides strong visibility Net Cash position… Cash on books OPERATIONAL EXCELLENCE Experience of operating Rs. 3.1 Billion FINANCIAL STRENGTH 500+km Toll projects Among very Completed India’s Firs
Slide 17: 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 41 billion (excluding GST) As on Dec-19 As on Mar-17 EPC of HAM: 5.2 bn Other EPC: 0.2 bn EPC of HAM Projects EPC of HAM: 41 bn Other EPC 16
Slide 18: Operating Leverage to Improve Margins
OPERATING LEVERAGE TO IMPROVE MARGINS 9M FY20 revenue contributed by 5 HAM projects Margin improvement as fixed cost absorption increased with higher execution on multiple projects Revenues and Operating EBITDA (Rs. Million) Revenues Operating EBITDA Revenues Operating EBITDA 27% YoY 28% YoY 74% YoY
Slide 19: Undivided Focus on Shareholder Value Creation
WITH UNDIVIDED FOCUS ON SHAREHOLDER VALUE CREATION 43.64% 47.42% Promoter Management Shareholding Pattern FIIs (as on 31st Dec 2019) Banks and Insurance Cos Mutual funds/AIF Public 1.82% 1.18% 3.55% 2.39% Market Statistics Creating Shareholder value As on Dec 31, 2019 INR USD Share Buyback • Bought
Slide 20: 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; Past President ASSOCHAM (2019) • Harvard Graduate with 30+ years experience in diverse roles in infra
Slide 21: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 20
Slide 22: One of Its Kind Asset Light Model
ONE OF ITS KIND ASSET LIGHT MODEL De-risked execution model Undertakes only Focus only on Value unlocking High Value Added Minimal EPC Assets HAM from assets PMC Leverages balance sheet Construction completely Minimal Plant & Continuous unlocking of strength & financial outsourced. Project Machinery
Slide 23: 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 24: 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 Shri 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 COMPLETED HAM project –
Slide 25: Appreciation by Prime Minister of India
APPRECIATION BY PRIME MINISTER OF INDIA SHRI NARENDRA MODI 24
Slide 26: Appreciation by Shri Nitin Gadkari, Union Minister
APPRECIATION BY SHRI NITIN GADKARI, UNION MINISTER 25
Slide 27: 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 26
Slide 28: 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 29: Financials
Wy WELSPUN ENTERPRISES INFRASTRUCTURE AND ENERGY FINANCIALS
Slide 30: Income Statement Q3 & 9M FY20 - Standalone
INCOME STATEMENT Q3 & 9M FY20 - STANDALONE Income Statement Snapshot (Rs Million) Particulars Q3 FY20 Q3 FY19 YoY Growth 9M FY20 9M FY19 YoY Growth Revenue from Operations 4,899 4,319 13.4% 13,096 10,287 27.3% Other Income 160 80 98.7% 450 508 -11.3% Total Income 5,059 4,399 15.0% 13,547 10,795 25.5
Slide 31: Income Statement Trend - Standalone
INCOME STATEMENT TREND - STANDALONE Income Statement Snapshot (Rs Million) Particulars FY18 FY19 9MFY20 Revenue from Operations 9,972 17,394 13,096 Other Income 956 546 450 Total Income 10,928 17,940 13,547 Operating EBITDA** 951 2,106 1,543 Operating EBITDA margin 9.5% 12.1% 11.8% EBITDA 1,660 2,36
Slide 32: Balance Sheet Snapshot - Standalone
BALANCE SHEET SNAPSHOT - STANDALONE Balance Sheet Snapshot (Rs. Million) 31st Dec 2019 30th Sep 2019 31st Mar 2019 Net worth 16,849 16,426 15,993 Gross Debt 2,381 1,739 1,709 - Long Term Debt 423 491 130 - Short Term Debt 1,958 1,248 1,579 Cash & Cash Equivalents 3,078 3,325 4,736 Net Debt /(Cash) (
Slide 33: Key Highlights
KEY HIGHLIGHTS Well Positioned to Benefit from India’s Economic Growth & Development Unique Position with Strong Financials to tap Infra Opportunities Strong Order book with visibility of significant revenue growth Asset light business model in Infra with regular project value-enhancement post COD D
Slide 34: 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 35: Thank You
THANK YOU For further details, please contact: Harish Venkateswaran AVP - Group Finance and Strategy Email: harish_venkateswaran@welspun.com 34
Slide 36: Appendix
WY WELSPUN ENTERPRISES INFRASTRUCTURE AND ENERGY APPENDIX
Slide 37: 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 38: 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 39: 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; First Two Status: Under Construction Status: Under Construction Annuities R
Slide 40: 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 km 8.4 of NH-24 in Delhi Project Length (Kms) 8.716 Km Award Date Jan 2016 Status: Record completion within 19 months. Receive
Slide 41: 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 42: 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 43: HAM: Aunta-Simaria (Ganga Bridge with Approach Roads)
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 44: 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: NHAI declared the Appointed Date as 16th January Acquisition Date Jan 2018 2019; execution in full swing Financial C
Slide 45: HAM: Package No. AM 2
6 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 Key Features: Concessionaire to receiv
Slide 46: HAM: Sattanathapuram - Nagapattinam
7 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; signed FC d
Slide 47: Existing BOT Projects Summary
EXISTING BOT PROJECTS SUMMARY Experience & expertise of successfully operating water project and 500+ kms of roads (Rs. Mn) External Value on Debt on Concession Sector Project Name Location books COD books End (March-19) (March-19) Highways Himmatnagar Bypass Gujarat 7 - Apr-06 Jun-20 Water Supply D
Slide 48: 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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