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Welspun Corp Ltd.

BSE: 532144 Sector: Metals & Mining
NSE: WELCORP ISIN Code: INE191B01025
BSE 00:00 | 29 Jul 142.80 -5.00
(-3.38%)
OPEN

150.00

HIGH

151.75

LOW

142.15

NSE 00:00 | 29 Jul 142.80 -5.10
(-3.45%)
OPEN

149.50

HIGH

151.90

LOW

142.00

OPEN 150.00
PREVIOUS CLOSE 147.80
VOLUME 293202
52-Week high 165.00
52-Week low 79.50
P/E 3.72
Mkt Cap.(Rs cr) 3,726
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 150.00
CLOSE 147.80
VOLUME 293202
52-Week high 165.00
52-Week low 79.50
P/E 3.72
Mkt Cap.(Rs cr) 3,726
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Welspun Corp Ltd. (WELCORP) - Chairman Speech

Company chairman speech

We continue to maintain our operational excellence amidst challenges by strengtheningour balance sheet and almost becoming debt-free on a net-debt basis. Utilizing our cashflows to pre-pay loans buyback shares and paying a substantial dividend during the yearwe have shown sustainable performance.

Our Dear Shareholders

Undoubtedly this has been one of the most challenging years in recent times for theglobal economy and the Indian economy. Even in these challenging times I am happy toshare that Welspun Corp grew from strength to strength with this year's performancebreaking all our previous records on production sales and profitability. We have alsostrengthened our balance sheet and we have almost become debt-free on a net-debt basis.We have utilized our cash flows to pre-pay loans buyback shares and pay a substantialdividend during the year.

YEAR IN REVIEW

I would like to begin by sharing with you some of the key updates on our operationalperformance. FY2020 was an exceptional year for the Company with record volumes andprofitability. Pipe Sales for the year stood at 1.5 million tonnes the highest annualsales tonnage achieved by the Company in its history. We have shown consistent growthduring the year on a quarter on quarter basis which truly reflects the operationalexcellence and the efficiency in all the three geographies where we are present. Our keyperformance indicators of sales volume realisation per metric tonne and EBITDA per metrictonne across the three geographies showed a consistent set of numbers.

US operations during the year recorded sales volume of 422 KMT with capacityutilization of more than 80% and a very healthy EBITDA. Our Saudi joint venture recordedsales volume of more than 500 KMT which is close to peak utilisation and witnessed asignificant turnaround in profitability. With improved cash flows the entity has startedrepaying shareholders' loans also. We have also seen a strong performance in our Indiaoperations as sales volumes approached 600 KMT with good mix of domestic oil & gaswater and export orders. Local presence in the three key geographies and our ability toserve the global markets from these locations position us to be a supplier of choice forour esteemed clients.

At the start of the year we had taken some strategic decisions towards prudentfinancial management. As a part of our strategy to focus on the core business and coreassets we announced divestment of our Plate and Coil Mill Division (PCMD) and the 43 MWpower division. We got the CCI approval in mid of December and both the parties standfirmly committed to consummate the transaction although the timelines have got extended.I am confident that this transaction will conclude in the current Financial year 2020-21.

During the year the company has reduced its net debt by Rs.2534 million in spite ofpaying out more than Rs.3500 million in dividends and buybacks including the relatedtaxes and costs. We are virtually a zero Net Debt company now with a strong focus on ROCEand Free Cash flow generation.

COVID-19 AND OUR RESPONSE

As you know the world is currently going through a major crisis; a crisis unlike anyother over the past 100 years. COVID - 19 is not only disrupting our health and healthcaresystems but also leaving a lot of collateral damage to an extent such that even theGovernment related public resources and all big and small corporates are under immensepressure both financially and otherwise.

As Welspun group we partake our share of hardships. While we are uncertain how longthese unprecedented and difficult times will last we are fully geared up to meet thesechallenges. Along with the nation we are also traversing the journey from 'Jan Hai toJahan Hai' to 'Jan Bhi aur Jahan Bhi'.

At Welspun Group it is our utmost priority to ensure safety & well-being of ourcustomers employees associates and community at large. Our sister concern in textileshas started manufacturing face masks and PPE and distributed it to our brave warriors whoare at the forefront of fighting epidemic. We have adopted several measures across ouroffices globally and plants to ensure that our commitment to our customers is notcompromised. In order to curb the spread of COVID-19 we have issued stringent traveladvisories to avoid any business-related travel within the country or in internationalmarkets. We have implemented 'Work from Home' for our employees for their safety andwell-being. A robust IT infrastructure has been put in place for remote working to ensurebusiness functions seamlessly from any location.

Extreme caution and highest standard of hygiene and safety is being practiced by ourstaff across all our locations. In order to create awareness and protect our employeesadditional efforts have been implemented.

We feel that at this juncture each one of us has a responsibility towards our societyand nation at large and as Welspun Group we are also trying to do our part.

YEAR AHEAD AND OUTLOOK

The macro scenario has significantly changed in the last few months. What we have seenin the recent past is unprecedented with the entire energy sector facing a double whammy- demand destruction due to COVID-19 and failed talks between OPEC+ countries leading to aruthless war for market share resulting into a supply glut. This is like a black swanevent resulting in both health and financial crisis at the same time. Crude Oil demandglobally and in the US took a drastic downturn in the March - May 2020 time frame. EIAestimates U.S. crude oil production fell from a record 12.9 million b/d in November 2019to 11.4 million b/d in May 2020. EIA forecasts that U.S. crude oil production will average11.6 million b/d in 2020 and in 2021 it will average 10.8 million b/d. This has resultedin many oil companies across the world and especially in the US announcing a cut incapex. Lower oil price in the first half of 2020 is expected to delay Final InvestmentDecision for Greenfield projects.

Welspun US is well-prepared to tackle the current challenges thanks to its excellenttrack record and strong customer relationships. The recent order win even in thisdifficult macro scenario is a testimony to the Company's capabilities. With this ourorder book stands at close to 120 KMT. We have several orders in the bid stage which mayspeed up if the crude prices stabilize at the earlier range.

The JV in Saudi Arabia continues to have order backlog of around 2-3 quarters. With oilprices recovering we expect ordering activity to gain traction in the region. While SaudiAramco might take 2-3 quarters for restarting large orders smaller O&G orders forhigh-priority oil fields are expected to be tendered soon. A few more water orders are inthe bid pipeline which we expect to be awarded in this year.

In India we have a robust order book of 411 KMT spread evenly between water projectsof various state governments O&G projects of PSUs and export orders. About 14700 kmof additional gas pipelines are at various stages of development to complete the NationalGas Grid. As per the National Infrastructure Pipeline (NIP) capex for oil & gaspipelines over FY20-25 is targeted at over Rs. 1 lakh crore (' 1 trillion). Orderingactivity is expected to gain traction post the opening up of the economy. We are alreadyseeing traction in terms of increased tendering activity from domestic PSU companies.

In the domestic water segment irrigation projects will continue to drive the demand.Activity is also expected to pick up on 'Nal se Jal' projects which intends to providepiped water supply to all Indians.

Covid-19 pandemic has impacted global supply chains and disrupted trade and commerce.We at WCL have taken all possible steps to minimize this disruption and are workingclosely with our suppliers and customers on a Business Continuity Plan. We are alsosharply focussed on cost control both capex and opex. WCL has deep relationships with allO&G majors and is a preferred vendor of choice for them. We are quite confident thatwe will weather this storm successfully over the next few months partnering closely withour steel suppliers and our customers. We will continue to keep a close watch on theongoing crisis and will pro-actively devise strategies to meet the challenges.

Our focus will continue to be on utilising our free cash flows for deleveraging andrewarding shareholders. We continue to strengthen our business through automationdigitisation and developing talent.

I would like to reaffirm that our teams are doing their best to keep up to thecommitments and ensure our products and projects are delivered on time with nocompromises on quality or safety. The management team stands firmly committed to overcomethe challenges in global markets and take WCL to greater heights in the long run.

MY SINCERE GRATITUDE

We are going through an unprecedented situation and I thank all our stakeholders whoare standing by us through this difficult time. I express my sincere gratitude to ourshareholders bankers customers Board of Directors and our committed employees. Theseare challenging and uncertain times but we feel confident that as a company andcommunity we can get through this together. I hope that you your family and colleaguesare well and are taking the necessary safety measures.

Stay safe stay happy.

My best wishes to you and all your loved ones

B. K. Goenka

Chairman.

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