MIRA INFORM REPORT

Report Date :

29.09.2008

IDENTIFICATION DETAILS

Name :	WELSPUN GUJARAT STAHL ROHREN LIMITED
Registered Office :	Village Jolva and Vadadla, Near Dahej Taluka Vagra, Bharuch District - 392130, Gujarat
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	26.04.1995
Com. Reg. No.:	11-25609
IEC No. :	0895004801
CIN No.: [Company Identification No.]	L27100GJ1995PLC025609
TAN No.: [Tax Deduction & Collection Account No.]	BRDW00071B / RKTW00064B
PAN No.: [Permanent Account No.]	AAACW0744L
Legal Form :	A Public Limited Liability Company. The company's shares are listed on the stock exchanges.
Line of Business :	Manufacturing of Longitudinal Slow Pipes, Spiral Slow Pipes, HFIW Pipes, Pipe Coating and API Grade Pipes.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	USD 80000000
Status :	Very Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established company having satisfactory track. Directors are reported as experienced, respectable and resourceful industrialists. Their trade relations are fair. Financial position is satisfactory. Payment are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms & conditions.

LOCATIONS

Registered Office/ Factory1 :	Village Jolva and Vadadla, Near Dahej Taluka Vagra, Bharuch District - 392130, Gujarat, India
Tel. No.:	91-2461-266011 / 256281
Fax No.:	91-2641-256285
E-Mail :	wgsrl@bom5.vsnl.net.in sales@wgsrl.com sales_wgsrl@welspun.com
Website :	http://www.welspunpipes.com
Area :	3288362 Sq .ft
Location :	Owned
Corporate Office 2 :	Trade World, ‘B’ Wing, 9^th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai-400013, Maharashtra, India
Tel. No.:	91-22-56503000 / 5650 3333 / 2490 8000 / 66136000
Fax No.:	91-22-24908020 / 21
Email :	Companysecretary_wgsrl@welspun.com
Website :	http://www.welspunpipes.com
Factory 2:	Welspun City, Village Versamedi, Taluka Anjar, Gujarat – 370110, India
Email :	Companysecretary_wgsrl@welspun.com
Website :	http://www.welspunpipes.com
Factory 3:	Village Versamedi, Taluka Anjar, District – Kutch, Gujarat, India
Tel. No.:	91-2836-279000 / 573428 / 29
Fax No.:	91-2836-279010 / 247070
Area :	4950518 Sq .ft.
Location :	Owned
Branches :	36, Bawa Potteries Complex, Aruna Asaf Ali Marg, Vasant Kunj, New Delhi - 110 070, India
Tel. No.:	91-11-2602 2051 / 2612 2054
Fax No.:	91-11- 2612 2064

DIRECTORS

Name :	Mr. Gopiram R. Goenka
Designation :	Chairman
Address :	Gayatri Villa, Sultanpur Mandi Road, Near Mehrauli, New Delhi – 110030, India
Name :	Mr. Balkrishan Goenka
Designation :	Vice Chairman and Managing Director
Address :	6, Chancellore Court, A/88, Carmicheal Road, Mumbai – 400026, Maharashtra, India.
Qualification :	B. Com
Name :	Mr. Rajesh R. Mandawewala
Designation :	Director
Address :	171, B Wing, 17^th Floor, Tanna Redisency, Bay view, 392, V. S. Marg, Prabhadevi, Mumbai – 400026, Maharashtra, India.
Qualification :	B. Com , A.C.A
Name :	Mr. Murarilal Mittal
Designation :	Director (Finance)
Address :	1601, Marathon Heights, P. B. Marg, Jia Bharat Oil Mills Compound, Lower Parel, Mumbai – 400013, Maharashtra, India.
Qualification :	A.C.A
Name :	Mr. Braja K. Mishra
Designation :	Chief Executive Officer S Board Member
Address :	C-2-5, Loyds Garden, Apartments, Saheb Marathe Marg, Prabhadevi, Mumbai – 400020, Maharashtra, India.
Qualification :	B. Com and MBA
Name :	Mr. Raj Kumar Jain
Designation :	Director
Address :	A/ 42, Manali, Evershine Nagar, Malad (West), Mumbai – 4000064, Maharashtra, India.
Qualification :	A. C. A.
Name :	Mr. K. H. Viswanathan
Designation :	Director
Address :	Plat No. 4, Kalyani Uttam Society, Antony Road, Chembur, Mumbai – 400071, Maharashtra, India.
Qualification :	ICWA
Name :	Mr. Sanjeev Ghai
Designation :	Nominee Director of IFCI Limited
Name :	Mr. Ram Gopal Sharma
Designation :	Director
Address :	707, Look Shrtia, Military Road, Off. Marol Maroshi Road, Andheri (East). Mumbai – 400059, Maharashtra, India.
Qualification :	B. Com, Master in Ecomomics
Name :	Mr. Nirmal Gangwal
Designation :	Director
Name :	Mr. N. Shankar
Designation :	Nominee of Export Import Bank of India

KEY EXECUTIVES

Name :	Mr. Ramesh H. Ved
Designation :	Company Secretary
Name :	Mr. Pradeep Joshi
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(As on 30.06.2008)

Category of Shareholders	No. of Shares	% of Holding
Shareholding of Promoter and Promoter Group^2
Indian
Individuals/ Hindu Undivided Family	287	0.00
Bodies Corporate	68079052	36.51
Sub Total	68079339	36.51
Foreign
Bodies Corporate	14865523	7.97
Sub Total	14865523	7.97
Total Shareholding of Promoter and Promoter Group	82944862	44.49
Public shareholding
Institutions
Mutual Funds/ Axis	22323466	11.97
Financial Institutions ^/Banks	283849	0.15
Insurance Companies	1555233	0.83
Foreign Institutional Investors	32564006	17.47
Sub-Total	56726554	30.42
Non-institutions
Bodies Corporate	18758031	10.06
Individuals	0	0
Individuals -i. Individual shareholders holding nominal share capital up to Rs 0.100 million	12050583	6.46
ii. Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	8465205	4.54
Overseas - Bodies Corporate	7503832	4.01
Sub-Total	46777651	25.09
GRAND TOTAL	186449067	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of Longitudinal Slow Pipes, Spiral Slow Pipes, HFIW Pipes, Pipe Coating and API Grade Pipes.

Products :

Item Code No.	73.05
Product Description	Steel Pipes and Tubes

Exports :

Products:

Steel Pipes

Countries :

• USA
• Indonesia

Imports :

Products:

Steel

Countries :

• Austria
• Germany

Terms :

Selling :

L/C

Purchasing :

L/C and Credit (Local 60-Import 180 days)

PRODUCTION STATUS

Particulars	Unit	Installed Capacity	Actual Production
Coating of pipes	000 SQMS	14500	1890
Welded pipes	MT	930000	377271
M. S. Plates	MT	12000	78
M. S. Pipe	MT	NA	4

GENERAL INFORMATION

No. of Employees :

1720

Bankers :

• Bank of Baroda
• Punjab National Bank
• Canara Bank
• Oriental Bank of Commerce
• Syndicate Bank
• Bank of India
• HSBC Bnak
• Standard Chartered Bank
• Deutsche Bank
• State Bank of India
• Andhra Bank
• State Bank of Bikaner & Jaipur
• ICICI Bank Limited
• State Bank of Tranvancore
• Industrial Development Bank of India

Facilities :

SECURED LOANS	31.03.2008 Rs. in millions
Debentures
Secured Redeemable Non Convertible Debentures	3000.000
From Banks
In Foreign Currency	90.170
In Rupee	11199.800
Interest Accrued And Due	--
EXTERNAL COMMERCIAL BORROWINGS	3035.570
Working Capital From Banks
In Foreign Currency	436.820
In Rupee	162.190
Total	17924.550
UNSECURED LOANS
Foreign Currency Convertible Bonds	-
Deferred Sales Tax Loan	106.450
Total	106.450

Banking Relations :	Good
Auditors :
Name :	MGB and Company Chartered Accountants
Address :	Mumbai, Maharashtra, India
Joint Ventures:	Adani Welspun Exploration Limited Dahej Infrastructure Private Limited
Associates/Subsidiaries :	Welspun India Limited, Survey No. 1076, Village and P. O. Vapi District Valsad Mumbai Tarry Towel Manufacture Welspun Syntex Limited Survey No. 094 Village Saily Manufacturer of specialty polyester filament yarn Welspun Gujarat Stahl Rohren Limited Welspun Zucchi Textiles Limited Welspun Power & Steel Welspun Pipes Limited Welspun Natural Resources Private Limited Welspun Pipes Insurance Welspun Tubular LLC Welspun Global Trade LLC Red Lebondal Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
304000000	Equity Shares	Rs. 5/-each	Rs.1520.000 millions
98000000	8% cumulative preference shares	Rs. 10/-each	Rs.980.000 millions
	Total		Rs.2500.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
177753235	Equity shares	Rs. 5/- each	Rs.888.770 millions

Note:

Out of the above 8120000 Equity Shares of Rs.5/-each fully paid up are allotted for consideration other than cash, pursuant to the Scheme of arrangement.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2008	31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		888.770	699.100	865.270
2] Share Application Money		886.900	68.450	68.450
3] Reserves & Surplus		14005.900	5767.740	4082.560
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		15781.570	6535.290	5016.280
LOAN FUNDS
1] Secured Loans		17924.550	11635.080	3933.280
2] Unsecured Loans		106.450	3511.150	4093.690
TOTAL BORROWING		18031.000	15146.230	8026.970
DEFERRED TAX LIABILITIES		1737.880	793.950	700.920
TOTAL		35550.450	22475.470	13744.170
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		19957.190	7234.650	6490.310
Capital work-in-progress		4249.660	9213.650	3622.510
INVESTMENT		3904.680	256.290	0.010
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	12878.350	5135.150	5428.870
	Sundry Debtors	7259.110	5849.380	3069.750
	Cash & Bank Balances	1207.710	3433.90	3066.550
	Other Current Assets	37.910	0.000	0.000
	Loans & Advances	3447.120	1910.870	1222.59
Total Current Assets		24830.200	16329.300	12787.760
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	16714.270	10089.780	9031.020
	Provisions	677.010	468.640	125.390
Total Current Liabilities		17391.280	10558.420	9156.410
Net Current Assets		7438.920	5770.88	3631.350
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		35550.450	22475.470	13744.170

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		40104.540	26784.820	18297.660
Other Income		186.440	42.730	19.110
Total Income		40290.980	26827.550	18316.770
Profit/(Loss) Before Tax		5342.080	2191.080	903.540
Provision for Taxation		1827.850	765.220	289.820
Profit/(Loss) After Tax		3514.230	1425.860	613.720
Earnings in Foreign Currency :
	Export Earnings	16545.940	10779.220	NA
	Commission Earnings	31.310	100.660	NA
	Other Earnings	707.170	0.000	NA
Total Earnings		17284.420	10879.880	NA
Imports :
	Raw Materials	25549.210	13854.660	NA
	Stores & Spares	167.520	59.410	NA
	Capital Goods	2342.840	892.190	NA
	Others	180.040	0.000	NA
Total Imports		28239.610	14806.260	NA
Expenditures :
	Cost of Goods Sold	26440.200	20224.010	13573.64
	Manufacturing Expenses	7135.630	3228.850	3068.840
	Financial Expenses	801.570	708.060	418.850
	Depreciation & Amortization	571.500	475.550	351.900
Total Expenditure		34948.900	24636.470	17413.230

QUARTERLY RESULTS

PARTICULARS	30.06.2008
Type	1^st Quarter
Sales Turnover	10903.60
Other Income	63.700
Total Income	10967.300
Total Expenditure	9163.900
Operating Profit	1803.400
Interest	439.800
Gross Profit	1363.600
Depreciation	293.900
Tax	358.300
Reported PAT	711.400

KEY RATIOS

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Debt-Equity Ratio	1.55	2.03	1.51
Long Term Debt-Equity Ratio	1.41	1.90	1.30
Current Ratio	1.20	1.27	1.13
TURNOVER RATIOS
Fixed Assets	2.57	3.21	2.89
Inventory	4.48	5.17	4.07
Debtors	6.16	6.12	6.57
Interest Cover Ratio	5.59	3.93	2.70
Operating Profit Margin(%)	17.53	12.51	9.55
Profit Before Interest And Tax Margin(%)	16.11	10.77	7.67
Cash Profit Margin(%)	10.12	6.97	5.16
Adjusted Net Profit Margin(%)	8.70	5.23	3.28
Return On Capital Employed(%)	23.86	16.99	14.52
Return On Net Worth(%)	32.90	25.45	15.96

LOCAL AGENCY FURTHER INFORMATION

HISTORY:

Subject is part of the $ 1.5 billion Welspun Group and a manufacturing hub for state-of-the-art pipe and related niche products. The Company started its activities in 26th April of the year 1995 and since then has supplied pipes for some of the most prestigious projects including the World's deepest pipeline project in the Gulf of Mexico, U.S.A. Welspun's state- of-the- art plants are located in Dahej and Anjar in Gujarat. The Company has recently set up a $ 100 million manufacturing facility in Little Rock, Arkansas, USA. The manufacturing facilities incorporate the hybrid JCO technology from Mannesmann Demag of Germany (SMS Meer). Company has been the leader in quality, innovation and technology and enjoys distinction of supplying highest recognized X 80 grade and 56' outer diameter line pipes in the country.  

The first HSAW mill of the company was commissioned at Dahej with capacity of 30,000 MTPA in the year 1997. After two years, in 1999, WGSRL had commissioned state of the art LSAW Mill at Dahej with the capacity 350,000 MTPA. During the year 2000, the company had started its coating Plant at Dahej, Joint Venture with Eupec, and the 2nd largest coating company in the World. Company became the first company from India to supply Pipes for the Offshore Projects in US during the year 2002. The Company had bagged an international order worth Rs.620.000 Millions in the year 2002 for three layers PE and internal epoxy lining coated spiral pipes. During the year 2003, Company had received the prestigious order from Petroiran Development Company, from Iran worth US 2 million. Welspun Gujarat forayed into weld pipes business in the year 2004 and also in the same year, the company had bagged Rs.4070 million Saw Pipes order in Libya.  

Subject made tie-up with Eupec Group in the identical year of 2004. The company commissioned ERW mill in the year 2005 at the new location Anjar with the capacity of 250,000 MTPA. During the year 2006, two new HSAW Plants of 350,000 MTPA came to existence, such as Bending Facility and Additional Coating Plants. In the year 2007, the company's 43 MW captive power plant at Anjar, was made its commercial operation. During the same year 2007, the company had received prestigious pipeline orders worth Rs.11660.000 Millions (USD 288 million) for the supply of line pipes overseas. During December of the identical year 2007, Welspun had acquired 76% interest in bath rug major Sorema, Tapates e Cortinas de Banho, SA (Sorema) of Portugal at an enterprise value of Rs.600 Million.  

Company had bagged prestigious pipeline orders worth Rs.10950.000 Millions in March of the year 2008 for the supply of Spiral Pipes in Northern Africa. The Company's 1.5 million tonne state-of-art Plate mill commenced its production in April of the year 2008. Part of the backward integration project of Welspun, the mill has the capacity to produce plates up to 4.5 meters wide and is all set to make a mark in the Company's operational capabilities.  

Company is prepared to meet the growing demand and is in a position to meet the stringent requirements and standards of high-grade line pipes. It plans to increase the capacity of its pipe plant by 75% to 1.75 million tons to meet growing demand for oil pipelines.

IMPORTANT CHANGES AND DEVELOPMENT:

Year 1997:

Forayed into the steel Business in SAW Pipes with the Commissioning of the first HSAW mill at Dahej.

Year 1999:

Commissioning of State of Art LSAW Mill at Dahej - Capacity 350,000 MTPA

Year 2001:

Joint Venture with World’s Largest pipes coating company ‘eupec pipe coatings gmbh, Germany to provide Pipe coating solutions at Dahej, Gujarat, India

Year 2002:

First company from India to supply Pipes for the Offshore Projects in US

Year 2004:

The Joint Venture with Eupec pipe coatings got merged with the company to provided complete pipe solutions under one roof.

Year 2005:

Commissioning of ERW mill at the new Location, Anjar - Capacity 250,000 MTPA

Initiated Backward Intergration project of plate-cum-coil Mill (First of its kind) at anjar to meet internal requirements and outside sale for critical appilicable.

Year 2006:

Setting up of 2 New HSAW Plants totaling to 350000 MTPA, at Anjar Gujarat

Setting up to the bending facility, at Anjar, Gujarat

Additional Coating Plants, at Anjar, Gujarat

Year 2007:

Trial run of plate mill producing the x 70 grade, widest plate of 4.5 mts wide and 45 mm thickness.

43 MW captive power plant at Anjar, commercially operational in Sep07

Initiated HSAW pipe facility at the Little Rock, Arkansas USA with a production capacity of 300000 tons of pipes annually

Largest ever order received by any of the pipe company i.e. order from trans Canada pipelines limited US

Ranked amongst India top 100 Corporate 2007 by S and P and CRISIL

Recognized as the “Fastest growing company” by business Today’s

Amongst the top 20companies to watch out for in 2008 by Business Today’s

Recognized as the top 3 saw pipe companies in the world by CLSA Asia pacific markets

Recognized as “Fastest growing Steel Products Company” by the comstruction world NICMAR.

Year 2008:

Recognized as 2^nd Largest (Large Diameter) Pipe Producer in the world by financial Times, UK

Plate Mill Operational March 2008; Achieved level II automation, Rolled X -70 API Grade, 4.5 Mtrs. Wide.

US Plant Double Jointing and Coating Facility Commissioned.

PERFORMANCE:

The Company produced 670,125 MT of pipes as compared to 500,969 MT in the preceding year registering a growth of 33.8% and attained Total Income of Rs.40290.98 mn compared to Rs.26955.39 mn in the preceding year recording a growth of 49.5% and PAT of Rs.3514.23 mn compared to Rs.1425.86 mn in the preceding year recording a growth of 146.5%. 

The Company catered to various esteemed customers including new relationship, registering exports turnover growth of 65.40% to Rs.21219.08 mn from Rs.12828.75 mn in the previous year. 

In line with the projection given in the last report, the Company commenced commercial production from its newly set up Plate Mill plant in the month of March 2008. 

The achievement in growth in PAT is noteworthy as the same is over the similar growth level achieved in the preceding year. 

This is an evidence of the Company's sustained ability to produce and supply high end speciality products and improvement in operational efficiency and resultant contribution to profitability. This also exhibits improvement in ability to fetch higher realizations which is recognition of high quality standards of pipes. 

PROSPECTS:

In spite of beginning of slowdown in USA towards the later part of the year 2007 due to sub prime crisis and its potential threat to the other parts in the global arena, the world economy showed a growth of 3.5% in the year 2007, whereas, Indian economy showed a growth of 8.7% in FY 07-08. Despite projections of grim global scenario going forward, your directors believe that projects like oil and gas which need the kind of products manufactured by the Company should continue to grow, as they are insulated from general slowdown effects. Besides, growing economies in Asia leave potential for energy sector to grow to lead to growth in demand for pipes and tubes. The directors believe that this should result in increase in further investment in this sector and consequently substantial increase in demand for line pipe, as every new commercial find needs connectivity with the main grid for monetization of such assets. 

To capitalize these opportunities, the Company has taken steps to increase its pipe manufacturing capacity (refer paragraph under caption 'Expansions') and also implement backward integration project viz. Plate cum Coil Mill manufacturing facility to reduce the risk of quality raw material unavailability, price fluctuations and dependence on plate & coil suppliers for timely delivery. 

With the commencement of production from Plate Mill during the year and stabilization thereof expected to be achieved soon, the Company would be one amongst the few companies in the sector which are having such a wide conversion range i.e. from steel slab to coated pipe. 

With the commissioning of 43 MW power plant at Anjar as a part of Plate cum Coil Mill Project, the Company has secured its power supply requirements as well as economy in the cost to achieve further competitive advantage in the global scenario. 

The directors are confident that the Company would be able to make optimum utilization of the capacity increase undertaken under expansion projects for achieving higher growth as well as rise in bottomline. 

EXPANSIONS:

Pipe Mill in the US:

As mentioned in the last report about the expansion in USA, the pipe manufacturing facility at a capital outlay of US$139 mn with an annual capacity of 300,000 MTPA at Arkansas in USA is progressing as per schedule and the production is scheduled to be commenced by third quarter of 2009. 

Project in Special Economic Zone (SEZ Project): 

The Company's wholly owned subsidiary is setting up an SEZ project at a capital outlay of Rs.4585.80 mn to manufacture 300,000 MTPA longitudinal pipes with coating facility of 24 lacs sq mtrs. per annum at Anjar, Gujarat. The project is expected to be operational by 2010. The projected economy in cost of production should give the Company a competitive edge in the domestic as well as international markets. 

MANAGEMENT DISCUSSION AND ANALYSIS: 

The Management Discussion and Analysis (MD&A) should be read in conjunction with the Audited Standalone Financial Statements of Subject and the notes thereto for the year ended March 31, 2008. This MD&A covers the Company's financial position and operations for the year ended March 31, 2008. Amounts are stated in Indian Rupees unless otherwise indicated. Abbreviations and acronyms used in this MD&A are identified in the Glossary of Terms in the Company's Annual Report of 2008. Summary of FY 2007-2008 Annual Results: 

Following several years of strong growth, Diluted Earnings Per Share of Rs.18.89 in FY07-08 clocked one more significant improvement when compared to Rs.8.66 in FY06-07. Net Sales, EBITDA and Net Income continued to grow at 49%, 97% and 146% respectively over the preceding year these excellent results reflect premium positioning of their products and services in the world market and overall burgeoning demand from the global Oil and Gas industry. 

They expect this momentum to continue for next 3-5 years. Led by better utilization of their existing capacities, increased output from our new pipe  

plants (which are getting operational by March '09), added sales of specialized, high-end platel coil products, clubbed with backward integration benefits should result in higher operating and net income. However current volatility in economic conditions, raw material and commodity prices could pose a greater challenge to the Company to achieve its targets. 

THE COMPANY OVERVIEW: 

Accredited supplier of over 50 Oil and Gas majors across the world (viz. Exxon Mobil, Kinder Morgan, British Petroleum, British Gas, Chevron, Petro China, SHELL, besides the Indian Oil & Gas companies like Reliance, GAIL, ONGC, IOC, etc.), gives the Company an edge over its peer companies, as accreditations are the pre-requisite to get short-listed for any order. Today, the Company takes pride in being amongst the few global pipe suppliers which makes the Company qualified for practically any line pipe contract across the globe. In the last 10-12 years the Company has expanded its operations to nearly 20 countries, covering almost every geography where Oil & Gas assets are located. The Company's production facilities additionally provide strategic advantages due to their proximity to national highways, seaports of Dahej, Kandla, Mundra and Mumbai in India and Little Rock Port in US through its own dedicated jetty. 

Synonymous with Engineering Excellence and its inherent philosophy to ensure that all its well diversified portfolio of products (viz. LSAW, HSAW and ERW) are engineered to excellence and are at par, with the best in the industry. The Company is amongst the few producers of the most challenging X 80 grade of pipes. They are also the first and perhaps the only company in India to have successfully manufactured the largest diameter pipes i.e. 56 inches for both LSAW as well as HSAW with un-precedented tolerance for high pressure Oil & Gas applications. Amongst many firsts also stands the fact that the Company is the only manufacturer today, which has supplied pipes laid below 8000 ft. of water, forming the World's deepest pipeline 'The Independence Trail project'. Recently, the Company also applied for patent in the US market for the unique welding technology that has been developed in-house, making it one of the few pipe companies worldwide, where innovation is a continues process. The Company's products have thus achieved enviable tolerance limits and all the above factors clubbed together complement the engineering excellence that has been built up within the organization. After scaling new heights in the most challenging off-shore projects, the Company is now currently involved in supplying pipes for most of the ongoing on-shore projects in US. The Company has emerged as the largest exporter of line pipe in US and this is no mean achievement considering the fact that US is one of the most demanding and quality conscious market. 

MARKET BACKGROUND, OUTLOOK & OPPORTUNITIES: 

INDUSTRY STRUCTURE, DEVELOPMENTS & OUTLOOK: 

In the last few years the global demand for Oil & Gas continued to rise reflecting economic growth and importance of Oil & Gas in the energy matrix. Encouraged by the continuing high levels of prices (Oil touching almost US$ 140/barrel), Oil & Gas companies in most regions of the world continued to increase their level of spending and drilling activity to offset declining rates of production from the mature fields and to explore and develop new reserves at the most challenging depths as well as inaccessible and dense regions. The next logical step to these vigorous activities have been substantial increase in demand for line pipe, since every new commercial find needs connectivity with the main grid for monetization of these assets. 

MULTIPLE DRIVERS FOR GROWTH IN DEMAND FOR PIPELINES: 

GLOBAL: 

In times to come, the line pipe industry will have a longer period of growth. The replacement demand in North America and the nascent, but strong, demand in Asia are poised to significantly boost the expansion of global pipeline infrastructure over the next five years. 

According to Simdex (US based tracking agency), over 2.56 lakh km of global line pipe demand is expected to come from 496 projects. This gives the demand visibility of US$ 96.12 billion in value terms for the next five years. Line pipes have a standard life of 30 years and in the US currently about 1 million miles of gas pipeline have outlived their economic life. In recent times line pipe owners have suffered from the bursting of old pipelines. The pipeline burst accidents in Alaska and Canada have raised awareness about the ageing trans-American pipelines, which are mostly of 1960 vintage. At average weight per kilometer (for 30' diameter pipe) of 300 tonnes and at an average realization of US$ 1300 per tonne, the value of opportunity from the replacement of these pipes comes to around US$ 624 billion. Globally, line pipes' annual sales amount to around US$20-25 bn, thus replacement demand itself could keep the industry busy for next 25 years (covered in further section). 

Simdex's demand projections for new pipeline in the next 5 years is presented in Table 01, also new announcements in the last few months are shown in Table 02 and cost as well as cost / length ratio based on future projects are shown in Table 03. 

THE COMPANY - GROWTH ENGINES TO MAINTAIN LONG TERM SUSTAINABLE GROWTH: 

The Volume Growth optimal utilization of current capacities: 

During the financial years 05-06 to 07-08, the sales volume has grown tremendously from 371 K tons to 641 K tones, registering a growth of 72%, whereas, sales in terms of Rupees in the corresponding period has grown from Rs.18bn to Rs.38bn, showing a jump of around 107%, in a span of 2 years on account of better realization per metrictonne. The average capacity utilization for 07-08 stands at 64% and is expected to touch 80% in the financial year 08-09 and even higher in the following years. 

Additional products for sale from new capacities being set up in India. 

The Company is setting up additional capacity of 450,000 MTPA of pipe manufacturing, comprising of 300,000 MTPA of LSAW and 150,000 MTPA of HSAW at Anjar, Gujarat. HSAW pipe mill of 150,000 MTPA is expected to be commissioned by Q2 FY 09 at an estimated cost of Rs.1000 mn. After the commissioning of this mill, the Company's total HSAW pipe manufacturing capacity in India will be 550,000 MTPA. LSAW pipe mill of 300,000 MTPA is expected to be commissioned by Q1 FY10 at an estimated cost of Rs.4,586 mn. After commissioning of this mill, the Company's total LSAW pipe manufacturing capacity in India will be 650,000 MPTA. This mill will be entitled for income tax benefits since it is located in SEZ. 

Additional capacities being set up in the US. 

To service its North American clients better and optimize on logistic cost, our Company is setting up a plant in Little Rock, Arkansas, US with a total project cost of US$139 mn. The project with the annual capacity to produce 300,000 MTPA of Spiral Welded pipes in the 24' to 60' (outside diameter) range is endowed with Coating and Double Jointing capabilities thereby giving a 'One stop solution' to its customers. With China's recent cancellation of export rebates on welded pipes and with North America continuing to be the key demand source for Indian companies, the plant will help the Company to service the North American demand better. This project will significantly compliment their Company's leadership as the World's largest supplier of line pipe in the US. 

The US project is slated to be commissioned by Q3 FY'09 and post completion of both Indian and US based facility, the Company will have annual capacity of 1.75 MTPA, making it the biggest large diameter pipe company in the world. All these projects are funded with an optimal mix of internal accruals and debt. 

OPPORTUNITY THROUGH BACKWARD INTEGRATION: 

The Company has recently set up a state-of-the-art facility in Anjar, Gujarat, to manufacture 1.5 MTPA of steel plates and coils from slabs at a capital outlay of US$ 450mn. The Plate cum Coil Mill is capable of producing American Petroleum Institute (API)-grade plates width upto 4.5m and thickness up to 45 mm and HR coil width upto 2.8m and thickness upto 25 mm. The Plate cum Coil Mill will also provide internal flexibility to take short gestation orders and would meet the Company's captive consumption requirements. Alternatively, these plates could also be used for varied high end applications like ship building, heavy construction, bridges, wind blades, boiler plates etc. To meet its complete energy requirement, the plant has 43 MW lignite based captive power plant. The Company has signed long term MOU for the procurement of slabs for plates. At steady utilization levels, our Company will be consuming 50-60% of the plate/coil production and offer the balance to other pipe producers and ship builders and other consumers in the region. The prices of API grade HR plates have risen to approx $1,500 / tonne due to base raw material price increase and more importantly due to robust demand of plates from pipe manufacturers, ship builders and boiler manufacturers and other consumers. The plate mill will not only improve the Company's pipe profitability but also shall assure steel plates supply even when global market conditions are tight. 

The Plate cum Coil Mill is a state of the art facility designed primarily to manufacture higher quality API plates and coils to support the total 1.75mn MTP Apipe capacity (post expansion) of their plants. 

The company is in trade terms with:

Ø NIGC

Ø PGN

Ø Volstalpone

Ø Sabgitcs

Ø L & T Mr. M. Ram Kumar (Head)

Mount Poonamallee Road, Manapakkam, PB No. 979, Chennai – 600089

Tel No. : 91-44-22492747 / 5656

Ø Gammon India Limited- Mr. P. M. Jakkal (President )

Veer Savakar Marg, Prabhadevi, Mumbai – 400025

Tel No. 91-22-24306761/1084

Ø Punj Llyod Limited – Mr. Atul Kumar (General Manager )

17-18, Nehru Place, New Delhi – 110018

Tel No. : - 91-11-26200123

Ø Gujarat State Petronet Limited

Mr. Sengupta – St. Mgr.

GSPC Bhavan, 5^th Floor, Sector – 11, Gandhinagar – 382011

Tel : 91-79-55701503

Ø Gujarat Gas Company Limited

Mr. Nishith Dave – VP

Near Parimal Garden, Ellis bridge, Ahmedabad – 380006

Tel: 91-79-6462980

FIXED ASSETS

• Land
• Building
• Plant and Machinery
• Office and Other Equipments
• Vehicle
• Furniture And Fixtures

PRESS RELEASE:

Welspun India to De-merge its divisions

Mumbai, September 15, 2008

Welspun India Limited, (WIL), part of US$ 3 billion Welspun Group today announced the de-merger of its Distribution & Marketing and Investment Divisions into two separate companies at cost basis. This will allow strategic focus on specific tiers of the businesses and thus shall enable better business control, flexibility on business operations and leveraging International focus of the Group.

The Distribution & Marketing Company which will hold all the international businesses and Welspun Retail Limited (WRL) will be known as Welspun Global Brands Limited, (WGBL) whereas the Investment Company will be known as Welspun Investments Limited, (WINV). As a part of this de-merger, WGBL will issue fresh shares to Promoters and shareholders of WIL in lieu of Promoters’ and WIL’s shareholding in WRL (which is valued at cost basis) and thus WGBL will hold entire equity of WRL.

The current shareholders of WIL will be allotted new shares in WGBL and WINV i.e. - shareholders of every 100 shares in WIL will be given 10 shares of WGBL and 5 shares of WINV.

Post Demerger, Promoter and Non-Promoter shareholding in WGBL shall be 57.6% and 42.4% respectively.

Upon de-merger, both WGBL and WINV will automatically be listed separately on Indian stock exchanges i.e NSE and BSE.

The above arrangement is subject to necessary statutory and regulatory approvals. The effective date for this de-merger is proposed to be 01.04.2009

About Welspun India www.welspuntowels.com

Welspun India, part of US$3 billion Welspun Group is one of the largest Home Textile Companies in the world. It started its activities in 1985 and since then has risen to become one of the largest exporters of Home Textiles in Asia and is amongst the 4^th largest terry towel player in the world. Welspun’s facilities are located in India (Anjar and Vapi at Gujarat), Mexico, Portugal and in UK. Welspun’s International presence is complimented by its acquisition of Christ, UK and Sarema in Portugal.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

The market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

The Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.46.96
UK Pound	1	Rs.83.91
Euro	1	Rs.66.36

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	8
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	9
--RESERVES	1~10	9
--CREDIT LINES	1~10	9
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		75

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, they have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions