Welspun Enterprises announces new infra projects and plans to apply for NBFC license

Following board meeting on 24 July 2017

Welspun Enterprises announced its plans to expand its operations in infrastructure and to apply for NBFC (Non-Banking Financial Company) licence.

In the infrastructure space, WEL has agreed to acquire 49% stake in two NHAI Hybrid Annuity Model (HAM) projects from MBL Group, subject to necessary approvals and statutory compliances. WEL will be the sponsor to these two projects, thus expanding its HAM project portfolio to three projects.

The two projects are:
a. 4-Laning of Chutmalpur-Ganeshpur section of NH-72A & Roorkee-Chutmalpur-Gagalheri section of NH-73
b. 4-Laning of Gagalheri-Saharanpur-Yamunanagar (UP/Haryana Border) section of NH-73

The consideration for the stake purchase is Rs. 23 crore. The Company has the option to acquire the remaining 51% stake in these projects as and when the regulator (NHAI) permits. The consideration for the purchase of the remaining stake is fixed at Rs. 24.5 crore.

As per the Hybrid Annuity Model (HAM), the projects will have 40% financial support from NHAI. The debt component is estimated to be 48% of the project cost; and as sponsor, the balance will be funded by WEL (apart from the equity of MBL). WEL is in the process of completing documentations for financial closure and appointed date is expected to be announced by NHAI by the end of the month. The EPC contract of both projects will be executed by WEL.

Apart from this, as announced on 19 July 2017, WEL has emerged as the lowest bidder for the Aunta-Simaria HAM project from NHAI at the bid price of Rs. 1045 crore.

The Board of Directors of WEL has approved the proposal of its subsidiary, namely Welspun Financial Services (WFSL), to apply to RBI for NBFC licence. WEL will be holding 60% stake in the subsidiary. The remaining 40% will be held by the Welspun promoter group.

WEL would initially subscribe to 60% of the equity share capital of WFSL, up to an amount of Rs. 2 crore. The Board has given in-principle approval for maximum investment up to Rs.350 crore in the venture, from the Company's cash reserve. A Board delegated committee would be constituted to evaluate and take day-to-day decisions. The specific investment proposal and the business plan would be approved by the Board on obtaining NBFC License, post on-boarding the team. The Memorandum of Association is being suitably altered for this purpose.

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