Welspun, Lone Star plan JV for spiral pipes

The Welspun group has decided to form a joint venture with the $1.4 billion Lone Star Technologies of the US for manufacturing of spiral pipes.

The JV, christened as Welspun Lone Star Tubulars LLC, will manufacture 30,000 tonne of spiral pipes a year to cater to the oil and gas markets in North America. The company will be located in the south west of the US and is expected to be operational by March 2008.

According to the arrangements between the two promoters, the Welspun group will pick up 60 per cent equity stake in the new entity while the foreign company will have the remaining 40 per cent stake. Welspun Pipe Inc, a wholly owned subsidiary of Welspun Gujarat Stahl Rohren, will be the investment vehicle for the Welspun group in this new entity. The new company will have a combined debt and equity of Rs 300 crore initially.

The Welspun group's flagship Welspun Gujarat Stahl Rohren is one of the world's largest SAW pipe makers. It has an order book position of Rs 2,500 crore.

B K Goenka, Welspun's vice-chairman and managing director, told Business Standard, "The partnership will leverage our high quality line pipe manufacturing capacities with Lone Star's strong brand name and marketing expertise," he said.

Welpsun has been an alliance with Lone Star for last six years. Welspun has already established its presence in the US by manufacturing pipes for the laying of the world's deepest pipeline in the Gulf of Mexico.

The JV will enable Welspun to strengthen presence in the fast growing pipe markets in the US. It will also provide Lone Star an entry into spiral weld line pipe.