Welspun Corp Limited · NSE:WELCORP
Welspun — Q2 FY20 Earnings Presentation
37 slides from Welspun's earnings presentation, Oct 23, 2019
Slide 1: Q2 FY20 Investors' Presentation cover letter
WELSPUN CORP PIPES AND PLATES WCt/SE~2019 October 23, 2019 To, USE Ltd. National Stock Exchange of India Ltd. (Scrip Code-532144) (Symbol: WELCOKP, Series EQ) Department of Listing, Exchange Plaza, Bandra-Kurla Complex, P. J. Towers, Dalal Street, Bandra (F), Mumbai 400 001. — Mumbai 400 051. - Dear
Slide 2: Welspun Corp Ltd Investor Presentation - October 2019
Welspun Corp Ltd Investor Presentation - October 2019 World’s Leading Line Pipe HSAW Manufacturer LSAW ERW/HFIW
Slide 3: Safe Harbour
SAFE HARBOUR This presentation and the accompanying slides (the “Presentation”), which have been prepared by Welspun Corp Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securit
Slide 4: Agenda
1. COMPANY OVERVIEW AGENDA 2. FINANCIALS 3. OUTLOOK
Slide 5: Welspun Corp: An Overview
WELSPUN CORP: AGENDA AN OVERVIEW
Slide 6: Flagship Company of Welspun Group
FLAGSHIP COMPANY OF WELSPUN GROUP Global Leader in Home Specialised HAM Global Leader in Large Textiles Infra player Diameter Pipes Ranked #1 Home Textile Completed India’s 1st 14 lane Supplier to USA 5 Times in Last Manufacturing facilities in India, Expressway in record time of 19 6 Years Saudi Ar
Slide 7: Welspun Corp Ltd (WCL) - At a Glance
WELSPUN CORP LTD (WCL) - AT A GLANCE World’s leading welded line pipe manufacturer End-to-End service provider, offering comprehensive pipe solutions for a wide range of applications in oil and gas (for offshore and onshore projects) and water With an aggregate capacity of 2.55 mn MTPA , With manufa
Slide 8: Key Milestones
KEY MILESTONES Incorporated as Welspun First 50 KTPA HSAW mill at 200 KTPA LSAW mill at Dahej Won 1,700 KM Keystone Gujarat Stahl Rohren Dahej with Mannesmann, Germany project from Trans Canada 1995 1998 2000 2007 Renamed as Welspun Corp 350 KTPA LSAW mill at Anjar; Ltd.; Integrated plate and coil 3
Slide 9: Capital Markets and Governance
CAPITAL MARKETS AND GOVERNANCE Shareholding Pattern ♀ Strong credit rating (CRISIL): ♀ Long Term AA(-) with Positive Quarter ending September 2019 Outlook ♀ Short Term A1+ 27.8% Promoter ♀ Robust relationship with Marquee FIIs financial institutions like: 49.0% ♀ LIC DIIs ♀ Exim Bank 9.0% ♀ SBI
Slide 10: Driving Towards Value Creation
DRIVING TOWARDS VALUE CREATION All three geographies No Pledge of shares by Promoters simultaneously performing Saudi business – Strong future growth Operational & Financial visibility Turnaround; EPS accretive Visible improvement in Strong Free Cash Flow Operational and Financial generation Perform
Slide 11: Core Strengths
CORE STRENGTHS 8 Sustainability at the core of the business 1 End to End Products and 7 Solutions Turnaround in business performance 2 Global Reach with Local 6 Presence in Key Markets Experienced Board and Management with Proven Track Record 3 5 Partnership with global Focused on R&D and giants pip
Slide 12: End to End Products and Solutions
1 END TO END PRODUCTS AND SOLUTIONS Longitudinally welded pipes made from HR plates; used for onshore / off-shore oil & gas transmission. HSAW Pipes ERW/HFIW Pipes 18 – 140 inch diameter, 1.5 – 20 inch diameter, moderate wall low/moderate wall thickness LSAW Pipes thickness 16 – 60 inch diameter, hi
Slide 13: Global Manufacturing Facilities
2 GLOBAL MANUFACTURING FACILITIES INDIA UNITED STATES SAUDI ARABIA Capacity India US Saudi Arabia (in KMT) Total Products / City Anjar Dahej Mandya Bhopal Little Rock Dammam LSAW 350 350 - - - - 700 HSAW 380 50 150 175 350 375 1,480 ERW/ HFIW 200 - - - 175 - 375 Total (KMT) 1,655 525 375 2,555 Moder
Slide 14: Global Customer Reach
2 GLOBAL CUSTOMER REACH AMERICAS EUROPE & CIS Canada Russia Czech Rep. Spain USA Iraq China SOUTH MENA Qatar EAST ASIA Bahamas Algeria UAE Egypt Bangladesh AND Saudi India Mexico Oman AUSTRALIA Trinidad & Tobago Sudan Venezuela Thailand DOMESTIC Malaysia Nigeria Colombia Indonesia Plant Locations Pe
Slide 15: Established Relationship with Global Giants
3 ESTABLISHED RELATIONSHIP WITH GLOBAL GIANTS Oil & gas Transportation Others Approvals & accreditations from marquee customers across the globe 14
Slide 16: Expertise in Executing Critical Projects
4 EXPERTISE IN EXECUTING CRITICAL PROJECTS AMONG THE Independence Trail Water Depth Deepest 233 Kms, 24” deep sea gas transmission pipeline in Gulf of Mexico 2,420m (7,940 ft) Complexity: High collapse resistance IGAT- IV Wall Thickness Heaviest 100 Kms, 56” of high pressure gas transmission pipelin
Slide 17: Focus on R&D and Pipeline Technology
5 FOCUS ON R&D AND PIPELINE TECHNOLOGY Technical Experience of delivering pipe with stringent specifications knowhow gives us the edge for prestigious and challenging projects with optimal like Keystone Pipeline, Peru LNG, Wasit Gas Program, solutions Independence Trail, IGAT-IV, Master Gas - I Full
Slide 18: Experienced Board and Management
6 EXPERIENCED BOARD AND MANAGEMENT Board of Directors Management Team B.K.Goenka, Chairman • Amongst India’s most dynamic businessmen. Vipul Mathur, Managing Director & CEO, Member of Board • Ranked amongst India’s Most Powerful CEOs by Economic Times. • Well-known figure in the global pipe industry
Slide 19: Awards & Accolades – Testimony to Excellence
6 AWARDS & ACCOLADES – TESTIMONY TO EXCELLENCE Vipul Mathur OHS category in Golden Peacock National By The Martin Luther King Hall of Fame Steel CEO of engineering sector : Anjar Quality Award : Anjar Jr Commission of AR the year (2018) (2017) (2017) (2018) Salute to Best energy Golden Peacock CEO o
Slide 20: Turnaround in Business Performance
7 TURNAROUND IN BUSINESS PERFORMANCE PIPE SALES VOLUME in KMT Op EBITDA/ Ton in Rs. 656 571 UP 14,308 8,660 UP H1 FY20 H1 FY19 15% H1 FY20 H1 FY19 65% ROCE (%) EPS in Rs. 29.1% 22.6% UP 11.3 5.1 UP H1 FY20 FY19 650 bps H1 FY20 H1 FY19 120% ♀ India operations: ♀ Saudi Arabia operations: ♀ Commenced e
Slide 21: Visible Improvement in Key Metrics
7 VISIBLE IMPROVEMENT IN KEY METRICS Revenue 10000 Op EBITDA & Margin 8,968 15.0% 89,535 9000 14.0% 8000 13.0% 75,873 7,054 13.3% 7000 12.0% 60,355 5,935 5,754 6000 11.0% 5000 10.0% 43,101 4000 9.8% 10.0% 9.0% 9.3% 3000 8.0% 2000 7.0% 1000 6.0% 0 5.0% FY17 FY18 FY19 H1FY20 FY17 FY18 FY19 H1FY20 Net
Slide 22: Sustainability in Everything That We Do
8 SUSTAINABILITY IN EVERYTHING THAT WE DO 2,25,000 Trees planted in facilities in India with 635 acre of green cover; 8,500 tons of CO2 sequestered per year Minimizing Water consumption and avoid Water wastage through advance technology. Reuse of Water through ETP and 30 MLD STP at Welspun City, Anj
Slide 23: 3Es @ Welspun Group
8 3Es @ WELSPUN GROUP • Digital education Empowerment • Improving learning levels of children • Women Hygiene and Sanitary pads- Creating women entrepreneurs through distributorship model in villages ensuring each woman and • Welspun run schools adolescent has access to sanitary pads. So far 60 entr
Slide 24: Welspun Corp: Financials
WELSPUN CORP: AGENDA FINANCIALS
Slide 25: Orderbook – Quarterly Trend
ORDERBOOK – QUARTERLY TREND (Figures in KMT) Order Book Valued at USD 1.64 Billion 1,657 1,721 1,656 1,712 1,602 1,564 1,357 632 423 339 425 267 319 337 274 369 254 304 129 212 171 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Closing Order Book Order Booked Orders Executed 24
Slide 26: Financial Performance – Q2 FY20 & H1 FY20
FINANCIAL PERFORMANCE – Q2 FY20 & H1 FY20 QoQ YoY YoY Particulars (Rs Mn) Q2 FY20 Q1 FY20 Change Q2 FY19 Change H1 FY20 H1 FY19 Change Pipe Sales Volume (KMT) 337 319 5.6% 304 10.9% 656 571 14.9% Revenue 22,630 20,471 10.5% 21,525 5.1% 43,101 37,944 13.6% Operating EBITDA 3,169 2,585 22.6% 2,490 27.
Slide 27: Net Working Capital Under Control
NET WORKING CAPITAL UNDER CONTROL Cash conversion cycle at comfortable levels FY18 FY19 131 H1FY20 91 73 63 48 29 24 25 18 -4 -57 -60 -64 -69 -103 Inventory days Debtor days Payable days Trade Advance Cash Conversion Cycle *Includes Debtors + Inventory – Creditors – Trade Advance; Figures from FY19
Slide 28: Volume – Annual Trend
VOLUME – ANNUAL TREND Production and Sales in KMT – Pipes (including Saudi Arabian JV) Pipe Production Pipe Sales Valued at USD 2.15 Bn 1,279 1,252 1,152 1,130 1,119 1,100 1,084 1,019 1,018 1,022 1,020 1,010 954 935 739 656 FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20 Breaking out from the earlier cons
Slide 29: Income Statement – Annual Trend
INCOME STATEMENT – ANNUAL TREND Rs mn FY17 FY18 FY19 H1 FY20 Pipe Sales Volume (KMT) 935 1,084 1,279 656 Revenue 60,355 75,873 89,535 43,101 Operating EBITDA 5,935 7,054 8,968 5,754 MTM Loss on Bonds (2,578) (377) EBITDA 7,370 8,147 7,077 5,722 Depreciation 3,861 3,793 2,597 1,155 Finance cost 2,357
Slide 30: Income Statement – Quarterly Trend
INCOME STATEMENT – QUARTERLY TREND Rs mn Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Pipe Sales Volume (KMT) 318 254 267 304 339 369 319 337 Revenue 23,042 16,589 16,419 21,525 24,030 27,561 20,471 22,630 Operating EBITDA 1,448 1,376 1,741 2,494 2,075 2,658 2,585 3,169 MTM Loss on Bonds (282) (1
Slide 31: Balance Sheet – Annual Trend
BALANCE SHEET – ANNUAL TREND Rs mn 31-Mar-17 31-Mar-18 31-Mar-19 30-Sep-19 Net Worth 28,094 28,540 27,976 30,835 Short Term Loans 2,203 126 1,750 1,500 Long Term Loans 16,227 13,738 11,297 9,424 Gross Debt 18,430 13,864 13,047 10,924 Cash & Cash Equiv. 7,365 9,649 10,191 8,955 Net Debt 11,065 4,216
Slide 32: Key Financial Ratios – Annual Trend
KEY FINANCIAL RATIOS – ANNUAL TREND FY17 FY18 FY19 H1 FY20 Net debt/Equity 0.39 0.15 0.10 0.06 Solvency ratios Net debt/EBITDA 1.50 0.52 0.40 0.23 EBIT/Interest 1.49 2.35 2.53 6.21 Current Ratio 1.42 1.49 1.56 1.56 Fixed Asset Coverage 1.84 2.23 1.43 1.74 Operational ratios Total Asset turnover 0.73
Slide 33: Welspun Corp: Outlook
WELSPUN CORP: AGENDA OUTLOOK
Slide 34: Outlook - India
OUTLOOK - INDIA OIL & GAS ♀ Large-diameter pipe demand driven by gas grid development by GAIL & oil pipeline network by IOCL ♀ Recent decision by the Government to pitch in for viability gap funding for North East region pipeline network, is another positive news. ♀ Small-diameter pipe is expected t
Slide 35: Outlook – US & Saudi
OUTLOOK – US & SAUDI ♀ Rising fracking in the Permian basin Booming Oil & Gas production UNITED ♀ Constrained oil & gas evacuation pipeline capacity driving pipeline demand STATES ♀ Demand from Bakken basin and gas export demand also adding to growth ♀ Local US players incl. WCL, will continue to
Slide 36: Way Forward
WAY FORWARD Strong visibility provided by current Order Book of 1,357 KMT, coupled with Higher Global Bid Book of 2.6 mn tonnes and Global Upcoming Bids of 20.5 mn tonnes. Profitability associated with these orders is significantly better than recent trends Profitability likely to continue in th
Slide 37: Thank You
Welspun Corp Limited CIN: L27100GJ1995PLC025609 THANK AGENDA YOU Mr. Harish Venkateswaran harish_venkateswaran@welspun.com www.welspuncorp.com 40