Welspun Corp Limited · NSE:WELCORP
Welspun — Q3 FY2020 Earnings Presentation
45 slides from Welspun's earnings presentation, Feb 3, 2020
Slide 1: Exchange filing cover letter: results and dividend
‘N)~tWELSPUN CORP V V PIPES AND PLATES WCIJSEQ’2020 February 3,2020 To, BSE Ltd. National Stock Exchange of India Ltd. (Scrip Code-532144) (Symbol: WELCORP, Series EQ) Department of Listing, Exchange Plaza, Bandra-Kurla Complex, P.J. Towers, Dalal Street, Bandra (E), Mumbai —400 051. Mumbai —400001.
Slide 2: Trading Window and Business Update
%~(/WELSPUN CORP V V PIPES AND PLATES Trading Window: The Trading Window under the SEBI (Prohibition of Insider Trading) Regulations, 2015 which was closed from January 1, 2020, will continue to remain closed fill 48 hours after the declaration of the results. Accordingly, the Trading Window will op
Slide 3: Business Update: Breaking Barriers
BUSINESS UPDATE Breaking Barriers - WCL reports Highest Ever Quarterly and Nine Months Volumes and Profitability Record Global Sales: Quarter (428 KMT) & 9M (1,084 KMT) Q3 Operating EBITDA at Rs. 3,712 mn, up 79% YoY Q3 PAT at Rs. 2,342 mn, up 310% YoY; EPS at Rs. 8.98, up 317% YoY Net Debt
Slide 4: Business Update: EBITDA and profit
BUSINESS UPDATE 3. EBITDA: Operating EBITDA (after adjusting for Treasury income) at Rs. 3,712 mn, up 79% YoY Reported EBITDA stands at Rs. 3,855 mn, up 67% YoY Detailed reconciliation of Operating EBITDA is provided hereunder: Figures in Rs. Million Reconciliation of Operating EBITDA Q3 FY20 Q2
Slide 5: Business Update: Saudi business and project status
BUSINESS UPDATE 8. Update on Saudi business: The Saudi business has significantly turned around and continues to contribute towards profitability. With improved cash flows, the entity has started repaying shareholder’s loans and is likely to pay it back completely by Q1 FY21. Majority of the externa
Slide 6: Business Update: demand outlook
BUSINESS UPDATE On the small-diameter segment, City Gas Distribution projects are expected to drive the demand with more than 400 districts already planned to be covered under the network. The Ministry of Petroleum and Natural Gas has released a draft city gas distribution policy that may be adopted
Slide 7: Consolidated Performance Snapshot
BUSINESS UPDATE Consolidated Performance Snapshot Figures in Rs. Million unless specified Particulars Q3FY20 Q2FY20 Q3FY19 9MFY20 9MFY19 Ex-Saudi Arabia/ CWC operations - Pipe Production (KMT) 348 317 263 856 788 - Pipe Sales (KMT) 313 221 261 715 750 Total operations - Pipe Production (KMT) 473 443
Slide 8: Investor conference call and About Welspun Corp
BUSINESS UPDATE Q3 & 9M FY20 Investor / Analyst conference call: WCL management would be happy to answer investor queries on a conference call. Please find details below: Date: Tuesday, 4th February 2020 Time: 11:00 AM IST Dial in details: Primary Access: +91 22 6280 1145 / +91 22 7115 8046 Loca
Slide 9: Welspun Corp Ltd: World's Leading Line Pipe Manufacturer
Welspun Corp Ltd Investor Presentation - February 2020 World’s Leading Line Pipe Manufacturer
Slide 10: Safe Harbour
SAFE HARBOUR This presentation and the accompanying slides (the “Presentation”), which have been prepared by Welspun Corp Limited (the “Company” or “WCL”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for an
Slide 11: Agenda
1. Q3 & 9M FY20 – KEY HIGHLIGHTS 2. WCL - CORE COMPETENCE AGENDA 3. ANNEXURES: 1. About - Industry & WCL 2. Financials
Slide 12: Q3 & 9M FY20 Key Highlights
Q3 & 9M - FY20 AGENDA KEY HIGHLIGHTS
Slide 13: Q3 FY20 at a Glance
Q3 FY20 - AT A GLANCE 473 KMT 428 KMT 3,712 mn Highest ever 3M Production; Highest ever 3M Sales; Q3 Op EBITDA; Up 38% YoY Up 26% YoY Up 79% YoY 11,900/ 2,342 mn 9.0 US $170 Q3 Op EBITDA / Ton; Q3 Profit After Tax; Q3 EPS; Up 51% YoY Up 310% YoY Up 317% YoY ♀ Plate and Coil Mill: Divestment on Track
Slide 14: 9M FY20 at a Glance
9M FY20 - AT A GLANCE 1.21 mn MT 1.08 mn MT 9,466 mn 13,250 / US $188 Highest ever 9M Production; Highest ever 9M Sales; 9M Op EBITDA; 9M Op EBITDA / Ton; Up 28% YoY Up 19% YoY Up 50% YoY Up 57% YoY 5,332 mn 20.4 30.9% 25.2% 9M Profit After Tax; 9M EPS; Return on Capital Employed* Return on Equity*
Slide 15: Orderbook – Quarterly Trend
ORDERBOOK – QUARTERLY TREND (Figures in KMT) Order Book Valued at USD 1.51 Billion 1,721 1,656 1,712 1,602 1,564 1,357 1,305 369 337 428 304 274 212 171 376 423 425 339 319 267 130 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Closing Order Book Order Booked Orders Executed Consistent level of >1
Slide 16: Growing in Strength – Quarterly
GROWING IN STRENGTH - QUARTERLY 428 3,712 Sales Volume Operating EBITDA 369 (KMT) 339 337 (Rs. Mn) 3,169 304 319 2,658 2,494 2,585 267 2,075 1,741 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Profit After Tax Operating EBITDA / Ton 14,300 14,300 (Rs. Mn) 2,342
Slide 17: Growing in Strength – Yearly
GROWING IN STRENGTH - YEARLY Earnings Per Share 11,065 Net Debt (Rs.) 20.4 (Rs. mn) 12.3 4,216 6.0 2,856 1,715 1.0 FY17 FY18 FY19 * 9MFY20 FY17 FY18 FY19 9MFY20 Return on Equity Return on Capital Employed 30.9% (%) (%) 25.2% 22.6% 11.7% 8.8% 5.6% 6.4% 0.9% FY17 FY18 FY19* 9MFY20* FY17 FY18 FY19 9MFY
Slide 18: Volume – Yearly Trend
VOLUME – YEARLY TREND Production and Sales in KMT – Pipes (including Saudi JV) Pipe Production Pipe Sales Valued at USD 2.15 Bn 1,279 1,252 1,212 1,152 1,130 1,119 1,100 1,084 1,084 1,019 1,018 1,022 1,020 1,010 954 935 FY13 FY14 FY15 FY16 FY17 FY18 FY19 9MFY20 Breaking out from the earlier consiste
Slide 19: Results – Q3 & 9M FY20
RESULTS – Q3 & 9M FY20 Particulars (Rs Mn) Q3 FY20 Q2 FY20 QoQ Q3 FY19 YoY 9M FY20 9M FY19 YoY Pipe Sales Volume (KMT) 428 337 26.9% 339 26.1% 1,084 911 18.9% Revenue 28,878 22,630 27.6% 24,030 20.2% 71,979 61,974 16.1% Operating EBITDA 3,712 3,169 17.1% 2,075 78.9% 9,466 6,310 50.0% EBITDA 3,855 3,
Slide 20: Driving Towards Value Creation
DRIVING TOWARDS VALUE CREATION All three geographies No Pledge of shares by Promoters simultaneously performing; Strong future growth visibility Dividend – Visible improvement in Track record of paying for Operational and Financial last 15 years Performance Leaner B/S & Value Strong Free Cash Flow U
Slide 21: WCL Core Competence
WY WELSPUN CORP PIPES AND PLATES WCL CORE COMPETENCE
Slide 22: 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 23: Business Moat
BUSINESS MOAT Global Leadership Accreditations Expertise Among Top 3 Line Pipe Approvals: 50+ O&G majors; Executed critical & complex Manufacturers globally Qualifies for global bidding projects worldwide Customer Centricity Supplier Relationship Innovation Delivered 14+ mn MT Pipes with Long term a
Slide 24: End to End Products & Solutions
END TO END PRODUCTS & SOLUTIONS HSAW Pipes LSAW Pipes ERW/HFIW Pipes (Helically welded) (Longitudinally welded) (Electric Resistance Welded / High-frequency Induction Welded) 18 – 140 inch diameter, 16 – 60 inch diameter, 1.5 – 20 inch diameter, 6mm to 25 mm 6 mm to 43 mm 4 mm to 14 mm Used for On
Slide 25: Global but Local Manufacturing Presence
GLOBAL BUT LOCAL MANUFACTURING PRESENCE INDIA UNITED STATES SAUDI ARABIA Capacity Saudi India US (in KMT) Arabia 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
Slide 26: Expertise in Executing Critical Projects
EXPERTISE IN EXECUTING CRITICAL PROJECTS AMONG THE Independence Trail 233 Kms, 24” deep sea gas transmission pipeline in Gulf of Mexico Water Depth Deepest Complexity: High collapse resistance 2,420m (7,940 ft) IGAT- IV Wall Thickness Heaviest 100 Kms, 56” of high pressure gas transmission pipeline
Slide 27: Established Relationship with Global Giants
ESTABLISHED RELATIONSHIP WITH GLOBAL GIANTS Oil & gas Transportation Others Approvals & accreditations from marquee customers across the globe Acts as an Entry Barrier 19
Slide 28: Corporate Conduct & Governance
CORPORATE CONDUCT & GOVERNANCE ♀ Independent Board Structure with Majority Outside Directors ♀ No cross holdings with other group companies ♀ Zero Pledge of shares by Promoters ♀ Big Four as Statutory and Internal Auditors ♀ Statutory Auditors: Price Waterhouse Chartered Accountants LLP ♀ Internal A
Slide 29: Focus on Sustainability & CSR
FOCUS ON SUSTAINABILITY & CSR 3Es @ WELSPUN GROUP SUSTAINABILITY ENVIRONMENT. 2,25,000 Trees planted in facilities in India with 635 acre of green cover; 8,500 tons of CO2 sequestered per year Clean water, improved sanitation and development of green spaces Minimizing Water consumption and EMPOWERME
Slide 30: Way Forward
WAY FORWARD Strengthening Business Moat through: • Automation & Digitisation • Talent development • Quality control Higher Profitability: • Strong visibility through order book and Bid Book • Profitability trend to continue in future • Sharp focus on Cost control Focus on Core Assets: • Focus on Pip
Slide 31: Annexures
WY WELSPUN CORP PIPES AND PLATES ANNEXURES
Slide 32: Line Pipe Applications
LINE PIPE APPLICATIONS Line pipes are used for transporting oil, gas or water over long distances (interstate or from offshore/ under-sea) or as gathering lines (from well to processing centre) ERW/ HFIW ERW/ HFIW HSAW / LSAW Source: PHMSA, GAO & US EPA 24
Slide 33: WCL US – Outlook
WCL US – OUTLOOK Attractive Industry Fundamentals Driving Strong Demand Pipeline Capacity Constraints WCL: DOMINANT PLAYER IN US • Largest and most modern spiral (HSAW) mill • USA Oil production: ~14 mn b/d by 2021 (est.) • Patented manufacturing technologies from ~11 mm b/d in 2018 led by Permian b
Slide 34: WCL Saudi Arabia – Outlook
WCL SAUDI ARABIA – OUTLOOK Attractive Industry Dynamics Oil & Gas: Strong traction from Saudi Aramco WCL : ONE OF THE LARGEST PIPE PLANTS • Saudi Aramco working on expansion of four • Location Advantage: major fields: Marjan, Zuluf, Berri and Safaniyah • Proximity to Dammam Port • Increasing gas pro
Slide 35: WCL India – Outlook
WCL INDIA – OUTLOOK Oil & Gas: Domestic and Exports WCL: 20+ YEARS OF EXPERTISE • Domestic: • All-round capability: Pipes, bends, internal and • Large-dia demand driven by National Gas external coating, Concrete Weight Coating grid expansion (from 16,200 kms to 27,000 • Location advantage: Ideal to
Slide 36: Experienced Board and Management
EXPERIENCED BOARD AND MANAGEMENT Board of Directors Management Team B.K.Goenka, Non-Executive Chairman & Promoter Director • Amongst India’s most dynamic businessmen Vipul Mathur, Managing Director & CEO, Member of Board • Past President ASSOCHAM (2019) • Well-known figure in the global pipe industr
Slide 37: Awards & Accolades
AWARDS & ACCOLADES – TESTIMONY TO EXCELLENCE Bechtel Supplier OHS category in Golden Peacock National By The Martin Luther King Excellence Award engineering sector : Anjar Quality Award : Anjar Jr Commission of AR (2018-19) (2018) (2017) (2017) Salute to Supply chain Best energy Golden Peacock Great
Slide 38: Capital Market Update
CAPITAL MARKET UPDATE Promoter 32.6% FIIs 49.0% Shareholding Pattern DIIs Quarter ending December 2019 10.3% Public 8.1% As on February 3, 2020 INR USD Price Per Share 173.3 2.4 No of Shares outstanding (mn) 260.9 260.9 Market Statistics Market Capitalization (mn) 45,200 631 Daily Avg Trading Volume
Slide 39: Income Statement – Annual Trend
INCOME STATEMENT – ANNUAL TREND Rs mn FY17 FY18 FY19 9M FY20 Pipe Sales Volume (KMT) 935 1,084 1,279 1,084 Revenue 60,355 75,873 89,535 71,979 Operating EBITDA 5,935 7,054 8,968 9,466 MTM Loss on Bonds (2,578) - EBITDA 7,370 8,147 7,077 9,576 Depreciation 3,861 3,793 2,597 1,746 Finance cost 2,357 1
Slide 40: Income Statement – Quarterly Trend
INCOME STATEMENT – QUARTERLY TREND Rs mn Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Pipe Sales Volume (KMT) 267 304 339 369 319 337 428 Revenue 16,419 21,525 24,030 27,561 20,471 22,630 28,878 Operating EBITDA 1,741 2,494 2,075 2,658 2,585 3,169 3,712 MTM Loss on Bonds (282) (110) (2,185) (360) (17)
Slide 41: Balance Sheet – Annual Trend
BALANCE SHEET – ANNUAL TREND Rs mn 31-Mar-17 31-Mar-18 31-Mar-19 31-Dec-19 Net Worth 28,094 28,540 27,976 32,523 Short Term Loans 2,203 126 1,750 1,773 Long Term Loans 16,227 13,738 11,297 9,101 Gross Debt 18,430 13,864 13,047 10,874 Cash & Cash Equiv. 7,365 9,649 10,191 9,159 Net Debt 11,065 4,216
Slide 42: Key Financial Ratios – Annual Trend
KEY FINANCIAL RATIOS – ANNUAL TREND FY17 FY18 FY19 9M FY20 Net debt/Equity 0.39 0.15 0.10 0.05 Solvency ratios Net debt/EBITDA 1.50 0.52 0.40 0.17 EBIT/Interest 1.49 2.35 2.53 7.26 Current Ratio 1.42 1.49 1.56 1.63 Operational ratios Fixed Asset Coverage 1.84 2.23 1.43 1.79 Total Asset turnover 0.73
Slide 43: WCL – Saudi JV Financial Snapshot
WCL – SAUDI JV FINANCIAL SNAPSHOT Key figures of Saudi JV, which is not consolidated as per Ind-AS: Particulars in US$ MN Q3FY20 Q2FY20 Q3FY19 9M FY20 9M FY19 Saudi Arabia Ops: - Pipe Prodn (KMT) 125 126 80 356 158 - Pipe Sales (KMT) 114 116 78 369 160 Revenue 107 112 63 345 138 EBITDA 20 27 (1) 60
Slide 44: Net Working Capital Under Control
NET WORKING CAPITAL UNDER CONTROL Cash conversion cycle at comfortable levels FY18 FY19 9MFY20 103 91 73 63 48 42 38 29 18 -4 -49 -57 -58 -64 -103 Inventory days Debtor days Payable days Trade Advance Cash Conversion Cycle *Includes Debtors + Inventory – Creditors – Trade Advance; Figures from FY19
Slide 45: Thank You
Welspun Corp Limited CIN: L27100GJ1995PLC025609 www.welspuncorp.com THANK AGENDA YOU For further information, please contact: Mr. Harish Venkateswaran harish_venkateswaran@welspun.com