India: Welspun Corp Q1FY23 highlights

Welspun Corp Ltd has recently announced its consolidated financial results for the year ended 30 June 2022.

• Line pipe production down 31% q-o-q: The company produced 158,000 t of line pipes in Q1FY23, down 31% against 229,000 t a quarter ago.
  
  
• Sales drop 42% q-o-q: Sales volume of line pipes aggregated to 157,000 t in Q1FY23, down by 42% q-o-q in comparison with 269,000 t in Q4FY22. Moreover, sales of SS pipes sales plunged 40% q-o-q to 692 t in Q1 from 1,160 t a quarter ago.
  
  
• Company's global order book position: Welspun's current global order book position stands at 1,020,000 t valued at INR 13,350 crores. Active bid books are at 19,30,000 t in Q1FY23.
  The company aims to complete the execution of its single largest order for supply of pipes valued more than INR 5,000 crores (approx) in the US. This order is for supply of 325,000 tonnes (t) (approx) of large diameter coated pipes for transporting natural gas from the Permian Basin to Houston. The pipes for this order will be produced in the Little Rock plant, US and the same will be executed over a period of 12 months, commencing H2 of FY23.
  
  
• Commissioning of new facilities: Welspun has commissioned state-of-the-art blast furnace and sinter plant, as well as TMT bars facility at Anjar, Gujarat in July 2022. The blast furnace can produce approximately 500,000 t of hot metal per annum which will primarily be used for manufacturing pig Iron and ductile iron (DI) pipes. The trial production for DI pipes has also started and the facility has recently received BIS certification. The annual capacity of DI plant is 400,000 t while, for TMT bar manufacturing capacity is 350,000 t.
  
  
• Hydrogen Gas Transportation and Clean Fuel Transition: Welspun has signed an MoU with Tata Steel to develop the framework for and subsequently manufacturing pipes for transportation of pure hydrogen and natural gas-blended hydrogen.
  
  

Company's outlook remains positive

The company is certain that long steel demand is likely to gain traction by increased spending on infrastructure and construction along with series of structural reforms that have been announced by the government such as PM Gati Shakti National Master Plan.

It also expects that its subsidiary Welspun Specialty Solutions Limited's (WSSL's) performance will continue to improve on the back new customer approvals and accreditations. For instance, the company has received its first order from an Oil & Gas sector PSU for Monel 400 Grade tubes. Moreover, they have delivered its first order of High Pressure Heater tubes in Grade 304N "U" Tubes.

WSSL has introduced BIS standard for seamless tubes & pipes (BIS 17875) and has intiated the process to obtain the accreditation.

With respect to natural gas sector, the company expects demand prospects to remain strong as the government has set a target to raise the share of natural gas in the energy mix from the current 6.7% to 15% by 2030. Industrial sector will remain the biggest driver of growth between 2021 and 2025, accounting for about 40% of the net increase in India's natural gas consumption. Demand from the water sector is also recovering which has been muted since pandemic. With a cooling off in steel prices, projects that were put on hold are now being proposed to be completed.