MIRA INFORM REPORT

Report Date :

17.06.2011

IDENTIFICATION DETAILS

Name :	WELSPUN CORP LIMITED (w.e.f. April 2010)
Formerly Known As :	WELSPUN GUJARAT STAHL ROHREN LIMITED
Registered Office :	Welspun City, Village Versamedi, Taluka Anjar, Bharuch – 392130, Gujarat
Country :	India
Financials (as on) :	31.03.2010
Date of Incorporation :	26.04.1995
Com. Reg. No.:	04-25609
Capital Investment / Paid-up Capital :	Rs.1021.610 millions
CIN No.: [Company Identification No.]	L27100GJ1995PLC025609
IEC No.:	0895004801
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.
No. of Employees :	2500 (Approximately)

RATING & COMMENTS

MIRA’s Rating :

A (64)

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	USD 100000000
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and a reputed company having fine track. Financial position of the company appears to be sound. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitment. The company can be considered normal for business dealings at usual trade terms and conditions.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

INFORMATION PARTED BY

Name :	Mr. Piyush
Designation :	Accounts Department
Date :	16.06.2011

LOCATIONS

Registered Office :	Welspun City, Village Versamedi, Taluka Anjar, Bharuch – 392130, Gujarat, India.
Tel. No.:	91-2461-266011/ 256281 – 91-2836-661111
Fax No.:	91-2461-256285 – 91-2836-279060
E-Mail :	wgsrl@bom5.vsnl.net.in sales@wgsrl.com sales_wgsrl@welspun.com companysecretary_wgsrl@welspun.com
Website :	http://www.welspunpipes.com
Area :	Owned
Corporate Office :	Welspun House, 5^th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai-400013, Maharashtra, India
Tel. No.:	91-22-56503000/ 56503333/ 24908000/ 66136000
Fax No.:	91-22-24908020/ 21
Email :	companysecretary_wgsrl@welspun.com
Website :	http://www.welspunpipes.com
Factory 1 :	Village Versamedi, Taluka Anjar, District – Kutch – 370110, Gujarat, India
Tel. No.:	91-2836-279000/ 573428/ 29
Fax No.:	91-2836-279010/ 247070
Area :	4950518 Sq .ft.
Location :	Owned
Factory 2 :	Village Jolva and Vadadia, Near Dahej, Taluka : Vagra, District Bharuch – 392130, Gujarat, India
Factory 3 :	KIADB Industrial Area, Gejjalagere, Taluka Maddur, District Mandya – 571428, Karnataka, India
Branches :	36, Bawa Potteries Complex, Aruna Asaf Ali Marg, Vasant Kunj, New Delhi – 110070, India
Tel. No.:	91-11-2602 2051/ 26122054
Fax No.:	91-11-26122064
USA Office :	9301, Frazier Pike, Little Rock , Arkansas 72205, USA

DIRECTORS

As on 31.03.2010

Name :	Mr. Balkrishan Goenka
Designation :	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 :	Executive 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. 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. 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 Director of Exim Bank Limited
Name :	Mr. Asim Chakraborty
Designation :	Director

KEY EXECUTIVES

Name :	Mr. Lauri Malkki
Designation :	Chief Executive Officer
Name :	Mr. Pradeep Joshi
Designation :	Company Secretary
Name :	Mr. Piyush
Designation :	Accounts Department

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.03.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	347	-
Bodies Corporate	69,492,623	33.95
Sub Total	69,492,970	33.95
(2) Foreign
Bodies Corporate	14,565,523	7.12
Sub Total	14,565,523	7.12
Total shareholding of Promoter and Promoter Group (A)	84,058,493	41.07
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	122,890	0.06
Financial Institutions / Banks	6,241,418	3.05
Insurance Companies	19,874,799	9.71
Foreign Institutional Investors	47,274,751	23.10
Sub Total	73,513,858	35.92
(2) Non-Institutions
Bodies Corporate	15,091,071	7.37
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	17,450,954	8.53
Individual shareholders holding nominal share capital in excess of Rs.0.100 Million	7,050,702	3.44
Any Others (Specify)	7,503,832	3.67
Overseas Corporate Bodies	7,503,832	3.67
Sub Total	47,096,559	23.01
Total Public shareholding (B)	120,610,417	58.93
Total (A)+(B)	204,668,910	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
Item Code No.	72-08
Product Description	Steel Plates

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 (As on 31.03.2010)

Particulars	Unit	Installed Capacity	Actual Production
Coating of pipes	000 SQMS	14500	5036
Welded pipes	MT	1150000	686226
M. S. Plates	MT	1500000	383577
Power (Co-generation)	MWH	300000	305462

GENERAL INFORMATION

No. of Employees :

2500 (Approximately)

Bankers :

• Andhra Bank
• Bank of Baroda
• Bank of India
• Canara Bank
• Citibank N.A.
• Corporation Bank
• Export Import Bank of India
• ICICI Bank Limited
• Industrial Development Bank of India Limited
• Oriental Bank of Commerce
• Punjab National Bank
• Standard Chartered Bank
• State Bank of Bikaner and Jaipur
• State Bank of Hyderabad
• State Bank of India
• State Bank of Indore
• State Bank of Patiala
• State Bank of Travancore
• The Hongkong and Shanghai Banking Corporation Limited
• Union Bank of India
• United Bank of India

Facilities :

SECURED LOANS	31.03.2010 Rs. in millions	31.03.2009 Rs. in millions
Debentures
Secured Redeemable Non Convertible Debentures	3000.000	3000.000
From Banks
In Foreign Currency	398.760	68.470
In Rupee	2782.370	10537.850
EXTERNAL COMMERCIAL BORROWINGS	6789.990	7623.870
Working Capital From Banks
In Foreign Currency	0.000	303.830
In Rupee	0.000	100.000
Total	12971.120	21634.020
UNSECURED LOANS	31.03.2010 Rs. in millions	31.03.2009 Rs. in millions
Foreign Currency Convertible Bonds	6735.000	0.000
Deferred Sales Tax Loan (Repayable in six equal annual instalments from Financial year 2009/ 2015)	83.460	103.410
Total	6818.460	103.410

Banking Relations :	--
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 and Steel · Welspun Pipes Limited · Welspun Natural Resources Private Limited · Welspun Pipes Insurance · Welspun Tubular LLC · Welspun Global Trade LLC · Red Lebondal Limited

CAPITAL STRUCTURE

As on 31.03.2009

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
204322410	Equity shares	Rs.5/- each	Rs.1021.610 millions

NOTE:

(Of the above 8,120,000 Equity shares Rs.5/- each fully paid up are allotted for Consideration other than cash, pursuant to the Scheme of Arrangement.)

As on 31.08.2010

Authorised Capital : Rs.2500.000 Millions

Issued, Subscribed & Paid-up Capital : Rs.1023.345 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		1021.610	932.460	888.770
2] Share Application Money		0.000	0.000	886.900
3] Reserves & Surplus		26366.000	14865.530	14005.900
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		27387.610	15797.990	15781.570
LOAN FUNDS
1] Secured Loans		12971.120	21634.020	17924.550
2] Unsecured Loans		6818.460	103.410	106.450
TOTAL BORROWING		19789.580	21737.430	18031.000
DEFERRED TAX LIABILITIES		2954.680	2487.630	1737.880
TOTAL		50131.870	40023.050	35550.450
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		24634.310	22910.340	19957.190
Capital work-in-progress		4011.170	3803.150	4249.660
INVESTMENT		2796.140	1718.380	3904.680
DEFERREX TAX ASSETS		0.000	0.000	0.000
FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT		(75.420)	354.980	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	13042.920	23236.410	12878.350
	Sundry Debtors	8040.870	5838.550	7259.110
	Cash & Bank Balances	9212.400	9193.710	1207.710
	Other Current Assets	13.410	25.180	37.910
	Loans & Advances	6194.150	11149.810	3447.120
Total Current Assets		36503.750	49443.660	24830.200
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	8133.800	6087.410
	Others Current Liabilities	8469.480	31519.770	16714.270
	Provisions	1134.800	600.280	677.010
Total Current Liabilities		17738.080	38207.460	17391.280
Net Current Assets		18765.670	11236.200	7438.920
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		50131.870	40023.050	35550.450

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	66139.350	58783.140	40104.540
		Other Income	127.740	178.790	186.440
		TOTAL (A)	66267.090	58961.930	40290.980
Less	EXPENSES
		Cost of Goods Sold	44928.460	42113.920	26440.200
		Manufacturing Expenses	10112.490	10322.780	7135.630
		TOTAL (B)	55040.950	52436.700	33575.830
Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		11226.140	6525.230	6715.150
Less	FINANCIAL EXPENSES (D)		1661.700	1734.960	801.570
	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		9564.440	4790.270	5913.580
Less/ Add	DEPRECIATION/ AMORTISATION (F)		1479.200	1254.190	571.500
	PROFIT BEFORE TAX (E-F) (G)		8085.240	3536.080	5342.080
Less	TAX (I)		2683.280	1200.410	1827.850
	PROFIT AFTER TAX (G-I) (J)		5401.960	2335.670	3514.230
Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		6795.960	5305.600	NA
Less	APPROPRIATIONS
		General Reserve	540.000	234.000	NA
		Debenture Redemption Reserve	106.250	268.750	NA
		Proposed Dividend on Equity Shares	408.640	279.740	NA
		Tax on above Dividend	67.870	47.540	NA
		Dividend on Equity Shares for earlier period	0.220	13.060	NA
		Tax on Dividend	0.040	2.220	NA
	BALANCE CARRIED TO THE B/S		11074.900	6795.960	NA
	EARNINGS IN FOREIGN CURRENCY
		Export Earnings	22190.570	17540.710	16545.940
		Interest Income	204.100	203.200	31.310
		Other Earnings	669.490	2504.500	707.170
	TOTAL EARNINGS		23064.160	20248.410	17284.420
	IMPORTS
		Raw Materials	17608.520	37488.550	25549.210
		Stores & Spares	929.970	727.070	167.520
		Capital Goods	1147.640	1169.730	2342.840
		Others	3518.720	3611.960	180.040
	TOTAL IMPORTS		23204.850	42997.310	28239.610
	Earnings Per Share (Rs.)
	Basic		28.04	12.59	21.53
	Diluted		25.18	12.50	18.89

QUARTERLY RESULTS

PARTICULARS	30.06.2010	30.09.2010	31.12.2010	31.03.2011
Type	1^st Quarter	2^nd Quarter	3^rd Quarter	4^th Quarter
Net Sales	20411.300	14182.900	11351.800	16748.400
Total Expenditure	17057.400	12777.500	9675.000	15336.500
PBIDT (Excl OI)	3353.900	1405.400	1676.800	1411.900
Other Income	52.000	26.400	37.700	45.300
Operating Profit	3405.900	1431.800	1714.500	1457.200
Interest	188.900	272.300	329.700	298.300
PBDT	3217.000	1159.500	1384.800	1158.900
Depreciation	400.500	413.600	420.600	421.900
Profit Before Tax	2816.500	745.900	964.200	737.000
Tax	920.800	242.700	312.500	143.100
Profit After Tax	1895.700	503.200	651.700	593.900
Net Profit	1895.700	503.200	651.700	593.900

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	8.15	3.96	8.72
Net Profit Margin (PBT/Sales)	(%)	12.22	6.02	13.32
Return on Total Assets (PBT/Total Assets}	(%)	13.22	4.89	11.93
Return on Investment (ROI) (PBT/Networth)		0.29	0.22	0.33
Debt Equity Ratio (Total Liability/Networth)		1.37	3.79	2.24
Current Ratio (Current Asset/Current Liability)		2.06	1.29	1.43

LOCAL AGENCY FURTHER INFORMATION

Details of Sundry Creditors:

Particulars	31.03.2010 (Rs. in millions)	31.03.2009 (Rs. in millions)	31.03.2008 (Rs. in millions)
Sundry Creditors
Due to Micro Small and Medium Enterprises	0.850	1.580	NA
Due to Others	8132.950	6085.830
Total	8133.800	6087.410	NA

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).

Subject 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, subject 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, WGSRL had received the prestigious order from Petroiran Development Company, from Iran worth US 2 million. Company 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. Company 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, company 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. Subject 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 company, 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. Subject 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:

1997:

· Forayed into the Steel Business in SAW pipes with the Commissioning of the first HSAW mill at Dahej, Gujarat, India

· Capacity 30,000MTPA, enhanced to 50,000MTPA.

1999:

· Commissioning of state-of-art LSAWMill at Dahej, Gujarat, India

· Capacity 350,000MTPA

2000:

· Joint Venture with world's largest pipe coating company 'Eupec Pipe Coatings GmBH', Germany to provide 'Pipe Coating' solutions at Dahej, Gujarat, India

2002:

· First Company from India to supply pipes for the Offshore Projects in the U S.

2004:

· Recognition as “Fastest Growing Steel Companies” by the Construction World Magazine.

2005:

· The Joint Venture with Eupec Pipe Coatings got merged with the Company to provide complete pipe solutions under one roof.

· Commissioning of ERW mill at the new location, Anjar Gujarat, India with a capacity 250,000 MTPA Commissioning of ERWmill at thenewlocation, Anjar Gujarat, India with a capacity 250,000MTPA

· Initiated Backward Integration project of Plate-Cum-Coil stackel Mill at Anjar to meet internal requirements and outside sale for critical applications.

2006:

· Setting up of 2newHSAWPlants totaling to 350,000MTPA, at Anjar, Gujarat, India

· Setting up of the Bending Facility, at Anjar

· Additional Coating Plants, at Anjar

2007:

· Trial run of Plate mill producing the X 70 grade, widest plate of 4.5mts wide and 45mmthickness.

· 43MWcaptive Power Plant commercially operational in Sept' 07

· Initiated HSAW Pipe mill at the Little Rock, Arkansas U.S.

· Largest ever order received by any of the pipe company i.e. Order from Trans Canada Pipelines Limited U.S.

· Ranked amongst India's Top 100 Corporate 2007 by SandP and CRISIL

· Recognized as the “Fastest Growing Company “by Business Today.

· Amongst the top 20 companies to watch out for in 2008 by Business Today.

· Recognized as the top 3 SAW Pipe companies in the World by CLSA Asia Pacific Markets

· Recognition as “Fastest Growing Steel Products Company” by the Construction World NICMAR.

2008:

· Recognized as 2nd Largest (Large Diameter) Pipe producer in the World by Financial Times, UK

· Plate Mill Operational, 28 March 2008; achieved Level II automation, Rolled X-70 API Grade, 4.5 mtrs wide.

· Double Jointing and Coating facility commissioned at the facility in Little Rock, Arkansas, U.S.

· Awarded “Emerging Company of the Year “ for Corporate Excellence 2008 by Economic Times.

· Commissioning of Additional HSAW Mill with the capacity of 150,000MTPAat Anjar, Gujarat

2009:

· Initiated De-merger of 1.5 Mn MTPA Plate cum Coil Mill at Anjar, Gujarat into a 100% subsidiary to achieve greater focus in the business.

· Commissioning of the Pipe Mill in Little Rock, Arkansas, U.S. with the capacity of 350,000 tons of HSAW pipes.

· Commissioning of the Coil Mill at Anjar, Gujarat.

PERFORMANCE:

During the year, the Company produced 686,226 MT of pipes as compared to 734,352 MT in the preceding year which was slightly lower compared to the preceding year due to change in the product mix. In the Plate cum Coil Mill, the Company registered almost 100% growth in Plate production to 383,577 MT as compared to 192,569 MT in the preceding year showing stabilization of production throughout the year whereas, the coil mill which commenced production at the end of the year, recorded production of 2,691 MT. On the coating side, the Company registered manifold growth of 7.5 times to 5,036K sqm as compared to 688K sqm in the preceding year mainly due to higher ratio of coated pipes to bare pipes. On the revenue side, the Company achieved growth of 12.38% in the Total Income mainly due to higher realization.

SUBSIDIARY COMPANY:

The Ministry of Corporate Affairs, Government of India vide their letter Ref. No. 47/402/2009-CL-III dated 20th May 2009, has exempted the Company from attaching a copy of Balance Sheet, Profit and Loss Account and other documents of its subsidiary companies as required to be attached under Section 212 of the Companies Act, 1956 to the Balance Sheet of the Company. Therefore, the said documents of the subsidiary companies viz. (1) Welspun Pipes Inc. USA (2) Welspun Tubular LLC, USA (3) Welspun Global Trade LLC, USA (4)Welspun Natural Resources Private Limited (5) Welspun Pipes Limited (6) Welspun Plastics Private Limited and (7) Welspun Urja India Limited are not attached herewith. However, the aforesaid documents relating to the subsidiary companies and the related detailed information will be made available upon request by any member or investor of the Company. Further, the Annual Accounts of the subsidiary companies will be kept open for inspection by amemberor an investor at the Registered Office of the Company or the respective subsidiary company.

MANAGEMENT DISCUSSION AND ANALYSIS: 

COMPANY OVERVIEW

They have developed unmatched expertise to manufacture pipes of varying qualities, grades and sizes that are used in long distance transportation of oil and gas for critical purposes and in complex regions. They can produce pipes ranging from ½ inches to 100 inches in outer diameter and up to 40 mm wall thickness. The Company is among the few, having the capability to manufacturer high grade pipes of upto X 80. They had also supplied pipes for “The Independence Trail” project- world's deepest pipeline, laid below 8,000 ft of water. On account of these capabilities the Company has become approved supplier to over 50 major oil and gas companies across the world. These include not only Indian oil and gas companies like Reliance Industries Limited, GAIL, ONGC and Indian Oil Corporation, but also international oil and gas companies like British Petroleum, Golden Pass Pipeline LP (Exxon Mobil), Enterprise, Peru LNG S.R.L. (Hunt Oil), Saudi Arabian Oil Company (Saudi Aramco), Ruby (Elpaso), Qatar Petro DOW and Gazprom (Stroytransgaz). In global pipeline industry, approval from clients acts as a major entry barrier as this process can take up to 2-3 years. With a total production capacity of 1.5 million MTPA, they are one of the largest pipe producers in the world and has supplied high quality pipes for critical projects from deep oceans to tough mountainous terrain. They are currently involved in supplying pipes for many of the ongoing projects in the U.S. This gives them an edge over a number of their peer companies, as approvals are the pre-requisite for getting short-listed for more orders from customers and their oil and gas customers prefer to deal with larger entities. Today, they are one of the very few suppliers in the world who are qualified for many of the significant pipe contracts across the globe.

The state-of-the-art Plate cum Coil mill in India (Anjar) with a capacity of 1.5 million MT can produce API grade of Plates and Coils. This backward integration assures high grade plate and coil availability for pipe manufacturing.

In the last 12 years, they have expanded their operations to more than 30 countries, covering most of the locations where oil and gas assets are located across the World.

GLOBAL ECONOMY

Global Steel Pipes Industry and Demand

Globally pipeline demand is closely linked with the growth in the energy consumption and investments in the sector which in turn depends on level of economic activities in oil and gas upstream. Energy investment worldwide has plunged over past year in the face of a tougher financing environment, weakening final demand for energy and lower cash flow. All these factors stem from the financial and economic crisis. Energy companies are drilling fewer oil and gas wells and cutting back spending on refineries, pipelines and power stations. Many ongoing projects have been slowed and a number of planned projects have been either postponed or cancelled. In the oil and gas sector, most companies have announced cutbacks in capital spending, as well as project delays and cancellations, mainly as a result of lower cash flow. International Energy Agency (IEA) in its World Energy Outlook 2009 estimated that global upstream oil and gas investment budgets for 2009 have been cut by around 19% compared with 2008- a reduction of over US$ 90 billion.

World primary energy demand to grow @1.5% per year between 2007 and 2030

The IEA’s recent report estimates that for the first time since 1981, energy use is set to fall in 2009 as a result of the financial and economic crisis but also says that with current liberal economic policies of governments across the world, it would quickly resume its long term upward trend once economic recovery is underway. As per IEA estimates, world primary energy demand is projected to increase by 1.5% per year between 2007 and 2030, from just over 12,000 million tonnes of oil equivalent (Mtoe) to 16,800 Mtoe- an over all increase of 40%. Developing Asian countries are the main drivers of this growth, followed by Middle East. The new estimates are a decline over its last year estimates on account of the global economic meltdown, on an average, the demand declined marginally in 2007-10 by 2%. Demand growth will rebound thereafter, averaging 2.5% per year in 2010-15. The pace of demand growth slackens progressively after 2015, as emerging economies mature and global population slows. IEA projects global oil demand at 83.2 million barrels per day ("mb/d") (-3.0 percent or -2.6 mb/d when compared with 2008).

Over half of all energy investment worldwide is required in developing countries, where demand and production are projected to increase fastest. Oil and natural gas are expected to remain primary sources and are expected to meet 52% of the global demand. IEA estimates that the world requires investment to the tune of $12 trillion in oil & gas sector in next 20 years, implying an annual investment of over $500 billion.

With the assumed resumption of global economic growth from 2010, demand for natural gas worldwide is set to resume its long-term upward trend. Low carbon content of gas relative to oil will act as a supportive factor to gas demand as world shifts more towards greener technologies. IEA estimates global gas demand to rise from 3.0 trillion cubic metres (tcm) in 2007 to 4.3 tcm in 2030, an average increase of 1.5% per year. The share of gas in the global primary energy mix is expected to increase marginally, from 20.9% in 2007 to 21.2% in 2030. Over 80% of the increase in gas use between 2007 and 2030 is expected to occur in non-OECD countries, with the biggest rise occurring in the Middle East. India and China will see the most rapid rates of increase.

GLOBAL PIPE DEMAND

As discussed in the previous section demand for energy will continue to grow over the years and the new supply must be connected to growing markets. Similarly, aging infrastructure must be replaced.

Existing pipeline projects

Based on the existing pipeline projects, the global pipeline requirements is expected to be ~ 65 mn MT with a total of 714 projects with an opportunity of more than $78 bn across the globe for the next five years.

Replacement of the old pipelines

Another growth driver is the replacement of the old pipelines in USA. More than 1 mn miles of the total 1.5 mn miles of USA pipelines were laid during the 1960's and 1970's. Since most of the pipelines have an economic life of ~ 30 years, there is a pressing need to replace them in order to avoid systematic failure and supply disruptions. Considering that the annual production of pipes have been over 16 - 17 mn tonnes, the replacement of even half of 1 mn miles of pipelines would take at least 10-12 years to complete.

New Gas is required to replace annual decline in existing gas supplies in North America, which shall enhance demand for new pipelines

The Annual daily production in U.S and Canada of 70 Bcf/d is witnessing a decline at the rate of 20% p.a. This annual decline volume that needs to be replaced each year is 14.0 Bcf/d. Over the next five years a total of 70 Bcf/d of new gas needs to be brought on-stream to maintain production at current rates.

Shale Gas

Shale gas is expected to gradually increase its share in total gas requirement over the next few years. US Shale Gas Supply is expected to reach over 14 bcf/d from nearly 5 Bcf/d in 2008. Shale gas addition to the supplies provides a huge potential for increase in pipelines demand over years.

Alaska Pipeline project

TransCanada and Exxon Mobil are working together on the Alaska Pipeline Project and cost estimates are in the range of $ 20 billion to $ 41 billion depending upon the option selected. The first option is a pipeline from Alaska's North Slope to Alberta, Canada, a distance of approximately 1,700 miles (2,737 kilometres) and shall require 48-inch diameter pipes with a capacity of 4.5 Bcf/d. The second option would transport natural gas from the North Slope to Valdez, Alaska, a distance of approximately 800 miles (1,287 kilometres). This scale of project shall provide another boost to the demand for pipes.

Low pipeline penetration in India provides huge potential

Currently India is developing pipeline infrastructure, with total gas pipeline length of less than 15,000 km, which compares grimly with 56,400 km in Pakistan and 18.3 lac km in USA. India has also one of the lowest pipelines spread per sq km of land at 0.003 km/sq km, compared with 1.08 km/sq for UK and 0.19 km/sq for US. This is mainly on account of lower share of natural gas in the primary energy mix of the country; it contributes only 9% to the primary energy basket of the country, compared with 21% for world and 24% for OECD countries.

Natural Gas as a source of energy is growing at a rapid pace and shall grow the demand for pipelines

At the time of independence, natural gas in India started with a negligible part in the total energy basket. Presently it has grown to about 160 million standard cubic meters per day (MMSCMD). The major domestic producers of natural gas are Reliance Industries Limited, Oil and Natural Gas Corporation Limited (ONGC), Oil India Limited (OIL) and JVs of Tapti, Panna-Mukta and Ravv. Government have also offered blocks under New Exploration Licensing Policy (NELP) to private and public sector companies with the right to market gas at market determined prices. New explorations along with favorable policies of the government would increase a demand for gas transportation infrastructure.

Pipeline transport is the most cost effective mode of transportation of petroleum products compared to road and railways. Despite this, only limited quantities of the total petroleum products are transported through pipelines in India. This has been on account of low level of investments in the past in laying of pipelines in India. However, this is expected to change in the coming years with large capex lined up by hydrocarbon companies and pipelines emerging as the preferred mode of transportation due to its inherent advantages such as lower operational cost, safety and protection against pilferage.

Major Gas pipeline players have firmed plans

Major oil & gas pipeline players, GAIL, GSPL and RGTIL (Reliance Gas Transportation Infrastructure Ltd.) plan to lay around 13,066 km of pipelines over the next 3-4 years. At a rate of 200 tonnes/km and conversion rate of US$ 1200/tonne, these three players are expected to create a total business potential of US$ 3.2 bn. GAIL currently has total gas pipeline length of 7,220 km across India and by FY13, it is planning to take it to 13,825 km with total capital expenditure of around US$ 2.7 bn.

Formation of the Petroleum and Natural Gas Regulatory Board to give boost to trunk pipelines

The Petroleum and Natural Gas Regulatory Board (PNGRB) was formed by an Act of Parliament in 2006. The board was assigned to be the nodal agency to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas excluding production of crude oil and natural gas.

With the setting up of the PNGRB and new gas finds on India's eastern coast, heavy investment is being lined up for laying pipelines across the country. As per plans, the length of trunk pipelines is set to triple to 33,000 kms in the next 4-5 years. The PNGRB is currently evaluating Expression of Interests (EOI) from various companies for about 26 per cent of proposed pipe length and has already invited EOI for around 2,500 km of the total capacity.

City Gas Distribution set to take-off

The PNGRB issued a number of regulations pertaining to pipeline and CGD such as exclusivity, open access, tariffs, common carrier principal and approval for new projects.

Once Section 16 of the PNGRB Act is notified, which is expected shortly, the board is expected to aggressively auction out licenses for City Gas Distribution (CGD) networks in about 200 cities. This section authorizes PNRGB to issue licenses for City Gas Distribution (CGD) networks. Indraprastha Gas Ltd, which had a pre- PNGRB authorization for Compressed Natural Gas (CNG) operations in Ghaziabad, and Voice-of-India, a non-government organization, challenged PNGRB's move in the Delhi High Court. In January 2010 the Court, ruled that PNGRB had no powers to issue licenses for retailing CNG and piped gas in cities as Section 16 had not been notified and authorizations issued till then were not valid. The government now plans to notify Section 16 of the PGNRB Act which gives the regulatory board the authority to issue licenses for CGD networks which it plans to expand to more than 200 cities.

In the first round of bidding, PGNRB issued licenses for CGD networks in 6 cities (Sonipat, Meerut, Kakinada, Dewas, Kota and Mathura). In the next round it was to award licenses to another 7 cities but deferred the process due to the court order. Twelve more cities will be up for bidding in the third round.

Liquefied Natural Gas (LNG) terminals projects to enhance pipe demand

India is importing LNG, which provides the energy security to the country. Players like Petronet LNG Limited, Shell and others have created and are creating large LNG terminals at various locations across the country (like Dahej, Hazira, Dabhol, Kochi, Ennore). This provides another opportunity for pipe demand.

Water Infrastructure projects: A Key driver for HSAW pipes

Economic growth, population expansion and the influx of people into cities have sharply raised India's water requirements. Asian Development Bank (ADB) has doubled its investment on water from U$1.2 bn in 1999 to U$2 bn in 2010 in the South and Southeast Asia region. In order to improve the sanitation levels as also to make available water to common man, the Government of India (GOI) launched the reform linked Jawaharlal Nehru National Urban Renewal Mission (JNNURM) along with Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) in December 2005. The total outlay for the Urban Infrastructure and Governance component of JNNURM is Rs. 315 bn for the mission period 2005-2012. Water and sanitation sector which covers water supply, sewage, solid waste management and storm water drainage accounts for about 73.4 % of the total number of projects sanctioned under JNNURM as on date and 80.8% of the total cost of projects sanctioned. In the absolute terms, the number of such projects sanctioned is 340 out of a total of 463 projects sanctioned under the scheme. Further under the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT), out of a total of 969 projects, the water and sanitation sector accounts for 828 projects. The share of water and sanitation sector in terms of cost is around 92% i.e. Rs. 184 bn out of Rs. 198 bn. Looking at the quantum of spend under the aforesaid schemes, this provides a huge opportunity for HSAW pipe industry.

FIXED ASSETS

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

AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH, 2011

Rs. in Millions

Particular	Year Ended
	31.03.2011
Sales/Income from Operations	65321.500
Less: Excise Duty	2627.100
Net Sales/ Income from Operations	62694.400
Total Expenditure
(Increase)/ Decrease in stock in trade	(2001.300)
Consumption of Raw Materials	37482.800
Purchase of Traded Goods	8938.000
Employees Cost	1850.900
Depreciation/Amortisation	1626.600
Other Expenditure	8576.000
Total	56503.000
Profit from operations before Other Income and Interest	6191.400
Other Income	161.400
Profit before Interest and Tax	6352.800
Interest/Finance Charges-(Net)	1089.200
Profit before Tax	5263.600
Provision for Taxation (Current, Deferred etc)	1619.100
Profit After Tax	3644.500
Share of Loss in Associates	--
Minority Interest in Profit/(Loss)	--
Profit After Tax after Minority Interest	3644.500
Paid up Equity Capital (Face Value of Rs.5/- each)	1023.300
Reserves excluding Revaluation Reserve	29503.600
Basic and Diluted EPS
Basic	17.82
Diluted	16.94
Debt Service Coverage Ratio (DSCR) (No of times)-*	1.94
Interest Service Coverage Ratio (ISCR) (No of times)-**	4.70
Public Shareholding
Number of shares	120610417
Percentage of shareholding	58.93
Promoters and Promoters Group Shareholding as on 31 March 2011
Pledged/Encumbered
No of Shares	Nil
Percentage of Shares (as a % of the total Shareholding of Promoters and Promoters Group)	Nil
Percentage of Shares (as a % of the total Share capital of the Company)	Nil
Non-Encumbered
No of Shares	84058493
Percentage of Shares (as a % of the total Shareholding of Promoters and Promoters Group)	100.00
Percentage of Shares (as a % of the total Share capital of the Company)	41.07
* DSCR-(Profit before interest & exceptional/extra-ordinary items) / (Interest expenses + Principal Repayments of long terms debts during period)
** ISCR-(Profit before interest & exceptional/extra-ordinary items) / (Interest expenses)

Note:

1. During the quarter ended 31 March 2011, the Company has allotted 53,500 Equity Shares of Rs.5 each fully paid up pursuant to the exercise of stock options by employees under Welspun Employee Stock Option Plan.

2. There were no investor complaints outstanding at the beginning of the quarter. During the quarter, 108 complaints were received and resolved.

3. The above consolidated figures of 31 March 2011 includes the results of new subsidiaries i.e. Welspun Tradings Limited and Welspun Projects Limited (Formerly known as MSK Projects (India) Limited), Welspun Mauritius Holding Limited, hence the results are not comparable with the corresponding figures of previous year.

4. Other expenditure for the year ended 31 March 2011 includes provision of Rs. 2007.500 Millions on account of out of court settlement with one of the foreign customers.

5. During the year, the Company has received export rebate of Rs.733.800 Millions on receipt of favourable judgement from Hon’ble Supreme Court which has been accounted as income.

6. The Board of Directors have recommended dividend of 40% on Equity shares (Rs.2 per share of Face Value of Rs 5 each).

7. The above results were reviewed and recommended by the Audit Committee and approved by the Board of Directors in its meeting held on 26 May 2011 in terms of Clause 41 of the Listing Agreement.

8. Previous year’s/Periods figures have been regrouped and reclassified wherever considered necessary.

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 :

Our 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.

Our 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.44.90
UK Pound	1	Rs.72.54
Euro	1	Rs.63.39

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	5
PAID-UP CAPITAL	1~10	6
OPERATING SCALE	1~10	7
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	8
--PROFITABILIRY	1~10	8
--LIQUIDITY	1~10	8
--LEVERAGE	1~10	7
--RESERVES	1~10	8
--CREDIT LINES	1~10	7
--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		64

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	Capability to overcome financial difficulties seems comparatively below average.	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
-	NB	New Business	-

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.