Developer's role more attuned to Welspun DNA: Akhil Jindal

Q&A with Head of finance and corporate strategy, Welspun Group

In a unique deal, Welspun Projects today transferred 72% of its engineering, procurement and construction (EPC) orderbook to Leighton Welspun Contractors (LWIN), today. LWIN in exchange issued shares worth 7.2% stake of its company, increasing Welspun group's stake in the company. Welspun Group's head of finance and corporate strategy, Akhil Jindal talks to Katya B Naidu on the deal.

Is this the first that a company bought stake by transferring orderbook? And why did you transfer your orders?

The focus of Welspun Project on EPC is very low. Construction is not done by us, and much of it was done by Leighton Welspun Contractors. We will look only at engineering and procurement in the future. Welspun Projects would more or less exit construction business except pending projects in the last lag. A developer's role is more attuned to the Welspun's DNA. We don't see EPC as our core business and we will more or less exit construction except pending projects in the last leg.

Welspun group bought 35% stake in Leighton Welspun earlier. What will your stake be now?

The group had 35% stake earlier. After this deal, it would increase to around 40% on an expanded equity base. The deal however is subject to shareholder approvals.

What is the value of orders that you transferred?

We transferred orders worth Rs 550 crore, and the value of the shares they would transfer is Rs 115 crore.

What will be your orderbook and Leighton Welspun's orderbook after the deal?

Our orderbook will be around Rs 200 crore, and Leighton Welspun's will be around Rs 4,500 crore.

Will Leighton Welspun gain from this deal as well?

From Leighton Welspun's side, not only will they gain orders, they will also make an entry to the water (treatment and construction) segment. They are not present in the segment significantly. Through this, they will get pre-qualification and foothold in the segment.

Are you transferring any equipment with the deal?

No fixed assets are transferred, it is more of a current asset transfer.

Will any employees be transferred as well?

Around 30-35 employees will be transferred. These are core strengths, the rest are contracted on a need basis.

After this deal, will Welspun Projects add more infrastructure projects as a developer?

Yes. This deal would allow us to focus as a developer. Earlier we were more of a construction company. But we do have BOOT (build, own, operate and transfer) road projects. We will selectively look at opportunities.