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3decades

 

MIRA INFORM REPORT

 

 

Report No. :

496664

Report Date :

08.03.2018

 

           

 

IDENTIFICATION DETAILS

 

Name :

WELSPUN CORP LIMITED (w.e.f. April, 2010)

 

 

Formerly Known As :

WELSPUN-GUJARAT STAHL ROHREN LIMITED

 

 

Registered Office :

Survey No. 659, Welspun City, Village Versamedi, Taluka Anjar, District Kutch – 370110, Gujarat

Tel. No.:

91-2836-279041

 

 

Country :

India

 

 

Financials (as on) :

31.03.2017

 

 

Date of Incorporation :

26.04.1995

 

 

Com. Reg. No.:

04-025609

 

 

Capital Investment / Paid-up Capital :

INR 1326.100 Million

 

 

CIN No.:

[Company Identification No.]

L27100GJ1995PLC025609

 

 

IEC No.:

0895004801

 

 

GST No.:

24AAACW0744L1ZC [Gandhidham]

24AAACW0744L2ZB [Bharuch]

 

 

TIN No.:

24210101948 [Bharuch]

 

 

TAN No.:

[Tax Deduction & Collection Account No.]

Not Available

 

 

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 :

Manufacturer and Exporter of Carbon Steel, Pipelines for Oil and Gas and Water Segments and Manufacturer of Plates, Coils and Coating for various Structural and Other Segments and also into Power Generation. (Registered Activity and also Confirmed by Management)

 

 

No. of Employees :

2818 (Approximately)

 

 

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23rd January 2017)

 

MIRA’s Rating :

A

 

Credit Rating

Explanation

Rating Comments

A

Acceptable Risk

Business dealings permissible with moderate risk of default

 

Status :

Satisfactory

 

 

Payment Behaviour :

Slow

 

 

Litigation :

Exist

 

 

Comments :

Subject is a part of Welspun Group and was established in the year 1995. The company is engaged in the business of production and coating of high grade submerged arc welded pipes, hot rolled steel plates and coils.

 

For the financial year 2017, revenue of the company has increased by 13.13% and has achieved fair profitability margin of 4.10%.

 

Company’s overall financial position seems to be healthy marked by negligible debt level and adequate net worth base.

 

The company has its share price trading at around INR 166 on BSE as on March 7, 2018 as against the Face Value (FV) of INR 5.

 

Business is active. Payments are reported to be slow.

 

In view of the aforesaid, we recommend caution while dealings with Welspun Group of Companies.

 

NOTES:

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

 

ECGC Country Risk Classification List

 

Country Name

Previous Rating

(30.09.2017)

Current Rating

(31.12.2017)

India

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low Risk

 

A2

Moderately Low Risk

 

B1

Moderate Risk

 

B2

Moderately High Risk

 

C1

High Risk

 

C2

Very High Risk

 

D

 

 

EXTERNAL AGENCY RATING

 

Rating Agency Name

CARE

Rating

Long term Loans = AA-

Rating Explanation

High degree of safety and very low credit risk

Date

05.02.2018

 

 

RBI DEFAULTERS’ LIST STATUS

 

Subject’s name is not enlisted as a defaulter in the publicly available RBI Defaulters’ list.

 

EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS

 

Subject’s name is not enlisted as a defaulter in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of 31-03-2016.

 

BIFR (Board for Industrial & Financial Reconstruction) LISTING STATUS

 

Subject’s name is not listed as a Sick Unit in the publicly available BIFR (Board for Industrial & Financial Reconstruction) list as of 08.02.2018.

 

IBBI (Insolvency and Bankruptcy Board of India) LISTING STATUS

 

Subject’s name is not listed in the publicly available IBBI (Insolvency and Bankruptcy Board of India) list as of report date.

 

 

INFORMATION PARTED BY

 

Name :

Mr. Bishwa  Bhushan Hota

Designation :

Marketing Manager

Contact No.:

91-9664467711

 

Given number [91-2836-279041] not exist

 

 

LOCATIONS

 

Registered Office :

Survey No. 659, Welspun City, Village Versamedi, Taluka Anjar, District Kutch – 370110, Gujarat, India

Tel. No.:

91-2836-662079/ 661111

Mobile No.:

91-9664467711 (Mr. Bishwa  Bhushan Hota)

Fax No.:

91-2836-279060

E-Mail :

companysecreatary_WCL@welspun.com

abhishek_kamtekar@welspuncorp.com

contact@welspun.com

bishwa_hota@welspun.com

deepkaran_singh@welspun.com

Website :

http://www.welspuncorp.com

http://www.welspunindia.com

 

 

Corporate/ Head Office :

Welspun House, 5th, 6th and 7th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai-400013, Maharashtra, India

Tel. No.:

91-22-24908000/ 66136000

Fax No.:

91-22-24908020/ 21

 

 

Manufacturing Unit 1 :

Village Jolva and Vadadla, Near Dahej, Taluka : Vagra, District Bharuch - 392130, Gujarat, India 

 

 

Manufacturing Unit 2 :

Welspun City, Survey No. 665, Village Versamedi, Taluka - Anjar, District Kutch - 370110, Gujarat, India 

 

 

Manufacturing Unit 3 :

Plot No 55 to 58, Part No 1, KIADB Industrial Area, Gejjalagere, Taluka Maddur, District Mandya - 571428, Karnataka, India

 

 

Marketing Offices :

Located at:

 

·         Mumbai

·         Delhi

 

 

DIRECTORS

 

AS ON: 31.03.2017

 

Name :

Mr. Rajesh Rameshkumar Mandawewala

Designation :

Director

Address :

161/171-B, Tanna Residency Bay View, Opp. Sidhivinayak Temple, Prab Hadevi,  Mumbai - 400025, Maharashtra, India

Date of Appointment :

26.04.1995

DIN No.:

00007179

 

 

Name :

Mr. Atul Manubhai Desai

Designation :

Director

Address :

C/62, Vellard View 14, Tardeo Road, Haji Ali, Mumbai - 400034, Maharashtra, India

Date of Appointment :

01.10.2014

DIN No.:

00019443

 

 

Name :

Mr. Ram Gopal Sharma

Designation :

Director

Address :

E 707 Lok Sarita, Military Road, Marol, Andheri (E),  Mumbai 400059, Maharashtra, India

Date of Appointment :

30.10.2004

DIN No.:

00026514

 

 

Name :

Mr. Raj Kumar Jain

Designation :

Director

Address :

1601, A-Wing, Nalanda Evershine Nagar, Malad- West Mumbai - 400064, Maharashtra, India

Date of Appointment :

30.07.2002

DIN No.:

00026544

 

 

Name :

Mr. Mintoo Bhandari

Designation :

Nominee Director

Address :

Flat 1, 16 Upper Wimpole Street, London, W1G 6LT, United Kingdom London 000000 GB

Date of Appointment :

18.08.2011

DIN No.:

00054831

 

 

Name :

Mr. Revathy Ashok

Designation :

Director

Address :

139/6-2, Domlur Layout Sharadamma Layout Bangalore - 560071, Karnataka, India

Date of Appointment :

07.08.2014

DIN No.:

00057539

 

 

Name :

Mr. Desh Raj Dogra

Designation :

Director

Address :

Flat No.402, Somerset Bldg, Adishankara Charya RD, CTS No 15C, Nr Hiranandani Gardens, Powa i, Mumbai 400076, Maharashtra, India

Date of Appointment :

10.02.2017

DIN No.:

00226775

 

 

Name :

Mr. Balkrishan Gopiram Goenka

Designation :

Director

Address :

Rocky Isle 46/C, B, Desai Raod Breachcandy, Mumbai - 400026, Maharashtra, India

Date of Appointment :

26.04.1995

DIN No.:

00270175

 

 

Name :

Mr. Viswanathan Hariharan Kollengode

Designation :

Director

Address :

Flat No.4,Kalyani Uttam Society St Anthony Road , Chembur, Mumbai 400071, Maharashtra, India

Date of Appointment :

28.10.2002

DIN No.:

00391263

 

 

Name :

Mr. Utsav Baijal

Designation :

Director

Address :

561 Ats Greens Sector 93a, Expressway, Noida - 201301, Uttar Pradesh, India

Date of Appointment :

10.11.2012

DIN No.:

02592194

 

 

KEY EXECUTIVES

 

Name :

Mr. S. Krishnan

Designation :

Chief Financial Officer

Qualification :

M. Com, LLB (Part 1) ACA, ACS, AICWA

Date of Appointment :

03.06.2013

 

 

Name :

Mr. Bishwa  Bhushan Hota

Designation :

Marketing Manager

 

 

Name :

Mr. Pradeep Joshi

Designation :

Company Secretary

Address :

704, Saraswati Co-Operative Housing Society Ltd. River Park, Rawalpada, Daisar (East) Mumbai - 400068, Maharashtra, India

Date of Appointment :

19.07.2007

PAN No.:

ADHPJ6528L

 

 

KEY MANAGEMENT TEAM :

Name :

Mr. Rajesh R. Mandawewala

Designation :

Group Managing Director

 

 

Name :

Mr. Lalitkumar Naik

Designation :

Managing Director & CEO

 

 

Name :

Mr. Akhil Jindal

Designation :

Director, Group Finance & Strategy

 

 

Name :

Mr. Godfrey John

Designation :

BU Head, India & APAC

 

 

Name :

Mr. Vipul Mathur

Designation :

Director - BU Head, Middle East, Europe and Africa

 

 

Name :

Mr. Vipul Mathur

Designation :

Chief Operating Officer

 

 

Name :

Mr. T. S. Kathayat

Designation :

President - Head QA & TS, India & KSA

 

 

Name :

Mr. Rajeev Singh

Designation :

President - Chief Human Resource Officer

 

 

Name :

Mr. Gaurang Desai

Designation :

BU Head PCMD & Chief Supply Chain Officer

 

 

Name :

Mr. S. Krishnan

Designation :

Chief Financial Officer

 

 

Name :

Mr. Prasanta Mukherjee

Designation :

Chief Technical Officer

 

 

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

 

AS ON: 31.12.2017

 

Names of Shareholders

No. of Shares

Percentage of Holding

Promoter & Promoter Group

127983165

48.25

Public

137242944

51.75

 

 

 

Total

265226109

100.00

 

 

Statement showing shareholding pattern of the Promoter and Promoter Group

 

Category of shareholder

No. of fully paid up equity shares held

Shareholding as a % of total no. of shares (calculated as per SCRR, 1957)As a % of (A+B+C2)

A1) Indian

0.00

Individuals/Hindu undivided Family

342

0.00

Rajesh R. Mandawewala

200

0.00

Balkrishan Gopiram Goenka

140

0.00

Dipali B. Goenka

2

0.00

Any Other (specify)

12,16,82,823

45.88

Welspun Pipes Limited

11,04,49,818

41.64

MGN Agro Properties Private Limited

60,00,000

2.26

Welspun Investments & Commercials Limited

52,33,000

1.97

B. K. Goenka Family Trust

5

0.00

Sub Total A1

12,16,83,165

45.88

A2) Foreign

0.00

Any Other (specify)

63,00,000

2.38

Intech Metals S.A.

63,00,000

2.38

Sub Total A2

63,00,000

2.38

A=A1+A2

12,79,83,165

48.25

 

Statement showing shareholding pattern of the Public shareholder

 

Category & Name of the Shareholders

No. of fully paid up equity shares held

Shareholding % calculated as per SCRR, 1957 As a % of (A+B+C2)

 

 

 

B1) Institutions

0

0.00

Mutual Funds/

2683293

1.01

DSP Blackrock Micro Cap Fund

2683293

1.01

Foreign Portfolio Investors

15577589

5.87

Financial Institutions/ Banks

21309355

8.03

Life Insurance Corporation of India

19277980

7.27

Insurance Companies

270000

0.10

Sub Total B1

39840237

15.02

B2) Central Government/ State Government(s)/ President of India

0

0.00

B3) Non-Institutions

0

0.00

Individual share capital upto INR 0.200 Million

18033181

6.80

Individual share capital in excess of INR 0.200 Million

19210063

7.24

Akash Bhansali

7757367

2.92

Alpana S Dangi

5442316

2.05

Any Other (specify)

60159463

22.68

HUF

2097012

0.79

Foreign Companies

23026000

8.68

Insight Solutions Limited

23026000

8.68

NRI – Non- Repat

1864572

0.70

NRI – Repat

1709405

0.64

Unclaimed or Suspense or Escrow Account

51030

0.02

Overseas corporate bodies

19127584

7.21

Granele Limited

19127584

7.21

Clearing Members

472676

0.18

Bodies Corporate

11810184

4.45

Mentor Capital

4732505

1.78

Trusts

1000

0.00

Sub Total B3

97402707

36.72

B=B1+B2+B3

137242944

51.75

 

 

BUSINESS DETAILS

 

Line of Business :

Manufacturer and Exporter of Carbon Steel, Pipelines for Oil and Gas and Water Segments and Manufacturer of Plates, Coils and Coating for various Structural and Other Segments and also into Power Generation. (Registered Activity and also Confirmed by Management)

 

 

Brand Names :

Not Available

 

 

Agencies Held :

Not Available

 

 

Exports :

 

Products:

Finished Goods

Countries:

·         USA

·         European Countries

 

 

Imports :

 

Products:

Raw Materials

Countries:

·         European Countries

·         Korea

·         Japan

·         Indonesia

 

 

Terms :

 

Selling :

L/C, RTGS, NEFT, Advance Payment and Credit (30 Days) 

 

 

Purchasing :

L/C, RTGS, NEFT, Advance Payment and Credit (30 Days) 

 

 

PRODUCTION STATUS: (NOT AVAILABLE)

 

 

GENERAL INFORMATION

 

Suppliers :

Reference:

Not Divulged

Name of the Person (Designation):

--

Contact Number:

--

Since how long known:

--

Maximum limit dealt:

--

Experience:

--

Remark

--

 

 

Customers :

End Users

 

Reference:

Not Divulged

Name of the Person (Designation):

--

Contact Number:

--

Since how long known:

--

Maximum limit dealt:

--

Experience:

--

Remark

--

 

 

No. of Employees :

2818 (Approximately)

 

 

Bankers :

 

·         Andhra Bank

·         Bank of Baroda

·         Bank of India

·         Canara Bank

·         Citibank N.A.

·         Corporation Bank

·         ICICI Bank Limited

·         IDBI Bank Limited

·         Oriental Bank of Commerce

·         Punjab National Bank

·         Standard Chartered Bank

·         State Bank of Bikaner & Jaipur

·         State Bank of India

·         State Bank of Travancore

·         Union Bank of India

·         DBS Bank Limited

·         EXIM Bank Limited

 

 

Facilities :

SECURED LOANS

31.03.2017

(INR In Million)

31.03.2016

(INR In Million)

LONG-TERM BORROWINGS

 

 

Measured at amortised cost

 

 

Redeemable non-convertible debentures

10077.760

13101.930

External commercial borrowings

2817.290

4064.300

 

 

 

SHORT TERM BORROWINGS

 

 

Measured at amortised cost

 

 

Loans repayable on demand

 

 

Working capital loan from banks

0.000

98.400

Pre-shipment Credit in Foreign Currency

0.000

430.650

Buyers' Credit

2144.140

1336.650

 

 

 

Less: Interest accrued

8.060

0.480

 

 

 

Total

 

15031.130

19031.450

 

Auditors :

 

Name :

Price Waterhouse LLP

Chartered Accountants

Address :

252, Veer Savarkar Marg, Shivaji Park, Dadar (West), Mumbai-400028, Maharashtra, India

Tel. No.:

91-22-66691500

Fax No.:

91-22-66547804/ 07

 

 

Memberships :

Not Available

 

 

Collaborators :

Not Available

 

 

Subsidiaries:

 

·         Welspun Pipes Inc.

·         Welspun Tradings Limited

·         Welspun Mauritius Holdings Limited

·         Welspun Pipes Limited (till March 17, 2017)

·         Welspun Middle East DMCC

·         Welspun Tubular LLC

·         Welspun Global Trade LLC

 

 

Joint ventures:

·         Welspun Wasco Coatings Private Limited (w.e.f. September 30, 2015)

·         Welspun Middle East Pipes LLC

·         Welspun Middle East Pipes Coating LLC

 

 

List of Others over which key management personnel or relatives of such personnel exercise significant influence or control and with whom transaction have taken place during the year:

·         Welspun India Limited

·         Welspun Steel Limited

·         RMG Alloy Steel Limited (erstwhile Remi Metal Gujarat Limited)

·         Welspun Foundation for Health and Knowledge

·         Welspun Realty Private Limited

·         Welspun Global Brands Limited

·         Welspun Captive Power Generation Limited

·         Welspun Enterprises Limited

·         Welspun Anjar SEZ Limited

·         Welspun Group Master Trust

·         AYM Syntex Limited (erstwhile Welspun Syntex Limited)

·         Welspun Energy Private Limited

·         Adani Welpsun Exploration Limited

·         Welspun Developers and Infrastructure Private Limited

·         Leighton Welspun Contractors

·         Welspun Fintrade Private Limited

·         Vipuna Tradings Limited

 

 

CAPITAL STRUCTURE

 

AS ON: 31.03.2017

 

Authorised Capital:

No. of Shares

Type

Value

Amount

 

 

 

 

304000000

Equity Shares

INR 5/- each

INR 1520.000 Million

98000000

Preference Shares

INR 10/- each

INR 980.000 Million

 

 

 

 

 

Total

 

INR 2500.000 Million

 

Issued, Subscribed & Paid-up Capital:

No. of Shares

Type

Value

Amount

 

 

 

 

265226109

Equity Shares

INR 5/- each

INR 1326.130 Million

 

 

 

 

 

Terms and rights attached to equity shares

 

Equity shares: The Company has only one class of equity shares having a par value of INR 5 per share. Each holder of equity shares is entitled to one vote per share however the holders of Global Depository Receipts (GDR’s) do not have voting rights in respect of shares represented by the GDR’s till the shares are held by the custodian. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting except in case of interim dividend. In the event of liquidation of the company the holders of the equity shares will be entitled to receive remaining assets of the Company after distribution of preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

 

Preference shares: Preference shares does not carry any voting rights in the Company, except as provided in the Companies Act, 2013. Preference share will have priority over equity shares in the payment of dividend and repayment of capital.

 

Details of shareholders holding more than 5% shares in the Company

 

Particulars

31.03.2017

 

No. of shares

% holding

Equity shares held by

 

 

Welspun Pipes Limited

110,449,818

41.64%

Granele Limited

28,188,889

10.63%

Insight Solutions Limited

23,026,000

8.68%

Life Insurance Corporation of India Limited

19,277,980

7.27%

 

Aggregate number of shares issued for consideration other than cash The Company has issued Nil (March 31, 2016: Nil, April 01, 2015: 227,781) equity shares of ` 5 each as sweat equity in compliance with applicable laws including the Securities and Exchange Board of India (Issue of sweat equity) Regulations, 2002.

 

 

FINANCIAL DATA

[all figures are in INR Million]

 

ABRIDGED BALANCE SHEET

 

SOURCES OF FUNDS

 

31.03.2017

31.03.2016

31.03.2015

I.              EQUITY AND LIABILITIES

 

 

 

(1)Shareholders' Funds

 

 

 

(a) Share Capital

1326.130

1326.130

1315.880

(b) Reserves & Surplus

16770.050

14974.880

15799.340

(c) Money received against share warrants

0.000

0.000

0.000

 

 

 

 

(2) Share Application money pending allotment

0.000

0.000

0.000

Total Shareholders’ Funds

18096.180

16301.010

17115.220

 

 

 

 

(3) Non-Current Liabilities

 

 

 

(a) Long-term borrowings

11725.000

15914.870

18625.160

(b) Deferred tax liabilities (Net)

2019.190

1532.080

1912.030

(c) Other long term liabilities

3653.640

5055.240

4027.500

(d) long-term provisions

350.260

271.620

266.300

Total Non-current Liabilities

17748.090

22773.810

24830.990

 

 

 

 

(4) Current Liabilities

 

 

 

(a) Short term borrowings

2136.080

1865.220

1881.510

(b) Trade payables

19342.890

13338.680

21872.450

(c) Other current liabilities

5434.330

4723.790

4388.440

(d) Short-term provisions

168.460

159.880

154.830

Total Current Liabilities

27081.760

20087.570

28297.230

 

 

 

 

TOTAL

62926.030

59162.390

70243.440

 

 

 

 

II.            ASSETS

 

 

 

(1) Non-current assets

 

 

 

(a) Fixed Assets

 

 

 

(i) Tangible assets

23627.120

25843.200

27950.510

(ii) Intangible Assets

71.680

115.020

124.540

(iii) Capital work-in-progress

242.490

248.900

229.840

(iv) Intangible assets under development

72.610

4.940

0.000

(b) Non-current Investments

2366.600

2383.880

3189.950

(c) Deferred tax assets (net)

0.000

0.000

0.000

(d)  Long-term Loan and Advances

538.160

512.400

346.440

(e) Other Non-current assets

944.280

287.320

270.700

Total Non-Current Assets

27862.940

29395.660

32111.980

 

 

 

 

(2) Current assets

 

 

 

(a) Current investments

5018.640

7147.630

7781.990

(b) Inventories

13270.280

7922.020

8272.300

(c) Trade receivables

13229.700

9824.850

17407.630

(d) Cash and cash equivalents

1148.830

1464.030

1994.670

(e) Short-term loans and advances

2389.640

3388.320

2666.470

(f) Other current assets

6.000

19.880

8.400

Total Current Assets

35063.090

29766.730

38131.460

 

 

 

 

TOTAL

62926.030

59162.390

70243.440

 

 

PROFIT & LOSS ACCOUNT

 

 

PARTICULARS

 

31.03.2017

31.03.2016

31.03.2015

 

SALES

 

 

 

 

 

Revenue from Operations

42628.140

37679.930

49489.390

 

 

Other Income

4328.100

2566.040

1474.360

 

 

TOTAL                                    

46956.240

40245.970

50963.750

 

 

 

 

 

Less

EXPENSES

 

 

 

 

 

Cost of Materials Consumed

28453.420

21448.820

31016.670

 

 

Purchases of Stock-in-Trade

3468.660

6713.180

9433.670

 

 

Changes in inventories of finished goods, work-in-progress and Stock-in-Trade

(384.900)

(40.830)

(37.810)

 

 

Employees benefits expense

1845.190

1934.280

1763.450

 

 

Excise duty

1367.570

1445.680

0.000

 

 

Other expenses

5052.930

6040.940

4486.900

 

 

TOTAL                                    

39802.870

37542.070

46662.880

 

 

 

 

 

 

PROFIT/ (LOSS) BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION

7153.370

2703.900

4300.870

 

 

 

 

 

Less

FINANCIAL EXPENSES                                   

2073.040

2014.600

2128.050

 

 

 

 

 

 

PROFIT/ (LOSS) BEFORE TAX, DEPRECIATION AND AMORTISATION

5080.330

689.300

2172.820

 

 

 

 

 

Less/ Add

DEPRECIATION/ AMORTISATION                    

2442.450

2475.260

2427.780

 

 

 

 

 

 

PROFIT/ (LOSS) BEFORE TAX

2637.880

(1785.960)

(254.960)

 

 

 

 

 

Less

TAX                                         

891.870

(554.390)

(97.900)

 

 

 

 

 

 

PROFIT/ (LOSS) AFTER TAX

1746.010

(1231.570)

(157.060)

 

 

 

 

 

 

EARNINGS IN FOREIGN CURRENCY

 

 

 

 

FOB value of export

 

8556.740

10203.670

 

 

Interest received

 

23.630

2.480

 

 

Testing Fees

 

0.000

96.730

 

 

Guarantee commission/ Assignment fees

 

15.480

22.150

 

 

Others

 

0.780

16.310

 

TOTAL EARNINGS

NA

8596.630

10341.340

 

 

 

 

 

 

IMPORTS

 

 

 

 

 

Raw Materials

18183.300

24495.090

 

 

Capital Goods

 

0.000

3.940

 

 

Stores parts

 

62.590

54.770

 

 

Traded Goods

 

6702.610

9433.670

 

 

Coal

 

6.690

43.290

 

TOTAL IMPORTS

NA

24955.190

34030.760

 

 

 

 

 

 

Earnings/ (Loss) Per Share (INR)

6.58

(4.67)

(0.60)

 

 

CURRENT MATURITIES OF LONG TERM DEBT DETAILS

 

PARTICULARS

 

31.03.2017

31.03.2016

31.03.2015

Current Maturities of Long term borrowings

907.900

937.860

732.680

 

 

 

 

Cash flow (used in)/ from operations

(379.100)

3377.230

2600.830

 

 

 

 

Net cash (used in)/ from operating activities

(48.820)

3362.140

2557.530

 

 

KEY RATIOS

 

EFFICIENCY RATIOS

 

PARTICULARS

 

31.03.2017

31.03.2016

31.03.2015

Average Collection Days

(Sundry Debtors / Income * 365 Days)

113.28

95.17

128.39

 

 

 

 

Account Receivables Turnover

(Income / Sundry Debtors)

3.22

3.84

2.84

 

 

 

 

Average Payment Days

(Sundry Creditors / Purchases * 365 Days)

221.17

172.88

197.36

 

 

 

 

Inventory Turnover

(Operating Income / Inventories)

0.54

0.34

0.52

 

 

 

 

Asset Turnover

(Operating Income / Net Fixed Assets)

0.30

0.10

0.15

 

 

LEVERAGE RATIOS

 

PARTICULARS

 

31.03.2017

31.03.2016

31.03.2015

Debt Ratio

((Borrowing + Current Liabilities) / Total Assets)

0.63

0.62

0.68

 

 

 

 

Debt Equity Ratio

(Total Liability / Networth)

0.82

1.15

1.24

 

 

 

 

Current Liabilities to Networth

(Current Liabilities / Net Worth)

1.50

1.23

1.65

 

 

 

 

Fixed Assets to Networth

(Net Fixed Assets / Networth)

1.33

1.61

1.65

 

 

 

 

Interest Coverage Ratio

(PBIT / Financial Charges)

3.45

1.34

2.02

 

 

PROFITABILITY RATIOS

 

PARTICULARS

 

 

31.03.2017

31.03.2016

31.03.2015

Net Profit Margin

((PAT / Sales) * 100)

%

4.10

(3.27)

(0.32)

 

 

 

 

 

Return on Total Assets

((PAT / Total Assets) * 100)

%

2.77

(2.08)

(0.22)

 

 

 

 

 

Return on Investment (ROI)

((PAT / Networth) * 100)

%

9.65

(7.56)

(0.92)

 

 

SOLVENCY RATIOS

 

PARTICULARS

 

31.03.2017

31.03.2016

31.03.2015

Current Ratio

(Current Assets / Current Liabilities)

1.29

1.48

1.35

 

 

 

 

Quick Ratio

((Current Assets – Inventories) / Current Liabilities)

0.80

1.09

1.06

 

 

 

 

G-Score Ratio Financial

(Networth / Total Assets)

0.29

0.28

0.24

 

 

 

 

G-Score Ratio Debt

(Debts / Equity Capital)

11.14

14.11

16.14

 

 

 

 

G-Score Ratio Liquidity

(Total Current Assets / Total Current Liabilities)

1.29

1.48

1.35

Total Liability = Short-term Debt + Long-term Debt + Current Maturities of Long-term debts

 

 

STOCK PRICES

 

Face Value

INR 5.00/-

 

 

Market Value

INR 166.00/-

 

 

FINANCIAL ANALYSIS

[all figures are in INR Million]

 

DEBT EQUITY RATIO

 

Particulars

31.03.2015

31.03.2016

31.03.2017

 

INR In Million

INR In Million

INR In Million

Share Capital

1315.880

1326.130

1326.130

Reserves & Surplus

15799.340

14974.880

16770.050

Share Application money pending allotment

0.000

0.000

0.000

Net worth

17115.220

16301.010

18096.180

 

 

 

 

long-term borrowings

18625.160

15914.870

11725.000

Short term borrowings

1881.510

1865.220

2136.080

Current Maturities of Long term debt

732.680

937.860

907.900

Total borrowings

21239.350

18717.950

14768.980

Debt/Equity ratio

1.241

1.148

0.816

 

 

 

YEAR-ON-YEAR GROWTH

 

Year on Year Growth

31.03.2015

31.03.2016

31.03.2017

 

INR In Million

INR In Million

INR In Million

Sales

49489.390

37679.930

42628.140

 

 

(23.863)

13.132

 

 

 

NET PROFIT MARGIN

 

Net Profit Margin

31.03.2015

31.03.2016

31.03.2017

 

INR In Million

INR In Million

INR In Million

Sales

49489.390

37679.930

42628.140

Profit/(Loss)

(157.060)

(1231.570)

1746.010

 

(0.32%)

(3.27%)

4.10%

 

 

 

LEGAL CASE

 

NOTE: LITIGATIONS DETAILS FILE ATTACHED

 

 

LOCAL AGENCY FURTHER INFORMATION

 

Sr. No.

Check list by info agents

Available in Report

(Yes/No)

1

Year of establishment

Yes

2

Constitution of the entity -Incorporation details

Yes

3

Locality of the entity

Yes

4

Premises details

No

5

Buyer visit details

--

6

Contact numbers

Yes

7

Name of the person contacted

Yes

8

Designation of contact person

Yes

9

Promoter’s background

Yes

10

Date of Birth of Proprietor / Partners / Directors

Yes

11

Pan Card No. of Proprietor / Partners

No

12

Voter Id Card No. of Proprietor / Partners

No

13

Type of business

Yes

14

Line of Business

Yes

15

Export/import details (if applicable)

Yes

16

No. of employees

Yes

17

Details of sister concerns

Yes

18

Major suppliers

No

19

Major customers

No

20

Banking Details

Yes

21

Banking facility details

Yes

22

Conduct of the banking account

--

23

Financials, if provided

Yes

24

Capital in the business

Yes

25

Last accounts filed at ROC, if applicable

Yes

26

Turnover of firm for last three years

Yes

27

Reasons for variation <> 20%

--

28

Estimation for coming financial year

No

29

Profitability for last three years

Yes

30

Major shareholders, if available

Yes

31

External Agency Rating, if available

Yes

32

Litigations that the firm/promoter involved in

Yes

33

Market information

--

34

Payments terms

Yes

35

Negative Reporting by Auditors in the Annual Report

No

 

 

INDEX OF CHARGES

 

SNO

SRN

CHARGE ID

CHARGE HOLDER NAME

DATE OF CREATION

DATE OF MODIFICATION

DATE OF SATISFACTION

AMOUNT

ADDRESS

1

C82182635

10627241

IDBI BANK LIMITED

09/03/2016

-

-

1160000000.0

RED CROSS ROAD, NEW DELHI,INDIAN RED CROSS SOCIETY BUILDING,1, RED CROSS ROAD, POST BOX NO. 231,NEW DELHI-110001, INDIA

2

C43136522

10548330

STANDARD CHARTERED BANK

28/01/2015

-

-

670000000.0

23, NARAIN MANZIL,BARAKHAMBA ROAD,NEW DELHI-110001, INDIA

3

B86522182

10452838

ALLAHABAD BANK

21/09/2013

-

-

2150000000.0

INDUSTRIAL FINANCE BRANCH, ALLAHABAD BANK BUILDING,2ND FLOOR, 37, M S MARG, FORT,MUMBAI-400023, MAHARASHTRA, INDIA

4

B85180818

10449706

IDBI TRUSTEESHIP SERVICES LIMITED

07/09/2013

-

-

2171400000.0

ASIAN BUILDING, GROUND FLOOR, 17, R. KAMANI MARG,BALLARD ESTATE,MUMBAI-400001, MAHARASHTRA, INDIA

5

B76197706

10428917

IDBI TRUSTEESHIP SERVICES LIMITED

14/05/2013

-

-

2175600000.0

ASIAN BUILDING, GROUND FLOOR, 17, R. KAMANI MARG,BALLARD ESTATE,MUMBAI-400001, MAHARASHTRA, INDIA

6

B68912336

10406011

IDBI TRUSTEESHIP SERVICES LIMITED

19/02/2013

-

-

1650000000.0

ASIAN BUILDING, GROUND FLOOR, 17, R. KAMANI MARG,BALLARD ESTATE,MUMBAI-400001, MAHARASHTRA, INDIA

7

B67024976

10413075

IDBI TRUSTEESHIP SERVICES LIMITED

21/01/2013

-

-

900000000.0

ASIAN BUILDING, GROUND FLOOR, 17, R. KAMANI MARG,BALLARD ESTATE,MUMBAI-400001, MAHARASHTRA, INDIA

8

B61857488

10393281

IDBI TRUSTEESHIP SERVICES LIMITED

09/11/2012

-

-

2528000000.0

ASIAN BUILDING, GROUND FLOOR, 17, R. KAMANI MARG,BALLARD ESTATE,MUMBAI-400001, MAHARASHTRA, INDIA

9

B61818332

10385714

EXPORT-IMPORT BANK OF INDIA

08/11/2012

-

-

816000000.0

CENTRE ONE BUILDING, FLOOR 21, WORLD TRADE CENTRE, COMPLEX, CUFFE PARADE, MUMBAI-400005, MHARASHTRA, INDIA

10

B61818449

10385715

EXPORT-IMPORT BANK OF INDIA

08/11/2012

-

-

1360000000.0

CENTRE ONE BUILDING, FLOOR 21, WORLD TRADE CENTRE, COMPLEX, CUFFE PARADE, MUMBAI-400005, MHARASHTRA, INDIA

 

 

UNSECURED LOANS

 

PARTICULARS

31.03.2017

(INR In Million)

31.03.2016

(INR In Million)

LONG-TERM BORROWINGS

 

 

Measured at amortised cost

 

 

Other loans

0.000

10.290

Less: Current maturities of long-term borrowings

907.900

937.860

Less: Interest accrued

262.150

323.790

 

 

 

Total

 

(1170.050)

(1251.360)

 

 

GENERAL INFORMATION

 

Welspun Corp Limited (hereinafter referred to as “WCL” or “the Company”) is engaged in the business of Production and Coating of High Grade Submerged Arc Welded Pipes, Hot Rolled Steel Plates and Coils. The Company is a public limited company which is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) and is incorporated and domiciled in India. The address of its registered office is “Welspun City”, Village Versamedi, Tal. Anjar, Dist Kutch, Gujarat - 370110, India.

 

 

MANAGEMENT DISCUSSION AND ANALYSIS

 

GLOBAL ECONOMIC OVERVIEW

 

Economic activity gained momentum in the second half of CY2016, especially in advanced economies. Growth picked up in the United States as firms grew more confident about future demand, and inventories started contributing ositively to growth (after five quarters of drag). Activity in Japan was a pleasant surprise, thanks to strong net exports, as well as in Eurozone, such as Germany and Spain, as a result of strong domestic demand.

 

Economic performance across emerging market and developing economies has remained mixed. Whereas China’s growth remained strong, reflecting continued policy support, activity had temporarily slowed down in India, following the impact of demonetisation. Brazil, on the other hand, was caught up in deep recession. Activity remained weak in fuel and non-fuel commodity exporters more generally, while geopolitical factors held back growth in parts of the Middle East and Turkey.

 

India’s economy continues to perform better than emerging peers. Stability in the political environment and the government’s pro-reform approach continue to strengthen confidence of entrepreneurs and investors. Higher infrastructure spending, increased fiscal devolution to states, and other fiscal reforms are expected to improve investor sentiment and business outlook.

 

 

THE OIL SCENARIO

 

Global liquids demand (oil, biofuels, and other liquid fuels) is expected to increase by around 15 Mb per day, to reach 110 Mb per day by 2035. This demand growth is expected to emanate from emerging economies, as rising prosperity leads to increased oil demand, with China accounting for half of the growth. In contrast, OECD oil demand is expected to decline (-8 Mb per day).

 

Global liquids supply is expected to increase by a little less (13 Mb per day). Supply escalation is driven by holders of large-scale, low-cost resources, especially in the Middle East, US and Russia, as these producers are assumed to respond to the growing abundance of oil resources by asserting their competitive advantage.

 

OPEC is assumed to account for nearly 70% of global supply growth, increasing by 9 Mb per day to 48 Mb per day by 2035. Non-OPEC supply is expected to grow by just over 4 Mb per day by 2035 with growth from the US (4 Mb per day), Brazil (2 Mb per day), Russia (1 Mb per day) and Canada (0.5 Mb per day) largely offset by declines in high-cost and mature regions elsewhere.

 

 Global oil consumption is projected to reach 109.4 Mb per day by 2040. Demand is expected to increase by just over 16.4 Mb per day over the period 2015–2040. Developing countries will continue to lead this growth, increasing by close to 25 Mb per day over the period, to reach 66.1 Mb per day by 2040.

 

Demand from Eurasia is projected to expand, from 5.3 Mb per day to 6.0 Mb per day by 2040. Demand in the OECD region, however, is expected to decline to 37.3 Mb per day by 2040.

 

 

THE GAS SCENARIO

 

Gas enjoys around a quarter share in the global primary energy mix, after oil and coal. The United States, Russia, China and Iran represent the world’s largest gas consumers. The largest producers are Russia, the United States, Canada, Qatar and Iran.

 

Recently, the growth of gas consumption has been weaker than expected, as gas has been crowded out by cheaper and more abundant coal. Besides, Europe has seen a rapid growth in renewables, which has reduced gas consumption. However, the recent lukewarm demand is not likely to persist, with global gas demand projected to grow by 1.6% annually over 2015-35.

 

Growth in conventional gas production (0.7% per annum) is expected to be led by the Middle East, Russia and Australia. The primary centres of demand growth are: China, with gas gaining share in industry and power; and the Middle East and the US where increased availability of gas helps boost demand within the power sector. By sector, the largest contributor is the industrial sector (with combusted and non-combusted use together accounting for 45% of growth) followed by power (36%).

 

While import dependence is expected to grow in both China and Europe, the increased diversity of supplies associated with a rapid expansion of LNG supports gas consumption. In China, growth in gas consumption (5.4% annually, 36 Bcf per day) is expected to outstrip domestic production. The result is that the share of imported gas in total consumption would rise to nearly 40% by 2035, up from 30% in 2015. Around half of these increased imports are expected to be met by LNG, with rising pipeline imports from Russia and other Commonwealth of Independent State (CIS) countries providing the remainder.

 

In Europe, domestic production is set to decline sharply (-3.2% p.a.) as existing fields mature and are not replaced. As a result, the share of imported gas in total consumption is expected to rise from around 50% in 2015 to nearly 80% by 2035. LNG imports are likely to supply around two-thirds of the increase in imports, with rising pipeline imports from Russia providing the remainder.

 

 

NATURAL GAS SCENARIO

 

The expected escalation in global gas supplies is roughly evenly split between conventional production and Shale

gas. Much of the hike in conventional production is contributed by the Middle East, Russia and Australia. Shale roduction (growing at 5.2% per annum) is expected to account for around 60% of the increase in gas supplies,

driven by the US where Shale output is expected to more than double (43 Bcf per day) towards the end of 2035. China is expected to emerge as the second largest Shale supplier.

 

 

AWARDS AND RECOGNITION

 

·         ‘Welspun Corp Limited, Anjar’ has been conferred with ‘Golden Peacock National Quality Award’ for the year 2017 during ‘27th World Congress on Business Excellence & Innovation’ @ Dubai on 19th April, 2017.

 

It was a great pleasure, having your ‘Welspun Corp Limited’ with us at Institute of Directors (IOD), India’s Dubai Global Convention 2017 and Golden Peacock Awards Presentation Ceremony at The Grand Hyatt in Dubai (UAE).

 

·         WCL Anjar won 3 Gold Awards and 1 Silver Award from Quality Council of India.

 

In 2016 September - WCL Anjar has won 3 Gold Awards (7S, HSE, Welding) and 1 Silver Award (TPM) in 27th Annual Convention on Quality Concepts organised by QCFI - Vadodara Chapter on September 18, 2016 at C. C. Mehta Auditorium, M. S. University, Vadodara.

 

·         WCL Anjar has been awarded with ‘5th FICCI Quality Systems Excellence Awards for Industry’- First prize in the Large Size category. Award was received on 20th January, 2017 @ FICCI, Federation House, Tansen Marg, New Delhi.

 

During the event, Welspun Corp Limited presented on ‘Manufacturing Excellence through Quality Management’.

 

 

STATEMENT OF STANDALONE FINANCIAL RESULTS FOR THE QUARTER ENDED 31st DECEMBER, 2017

 

(INR IN MILLION)

 

 

Particulars

Quarter Ended

31.12.2017

Quarter Ended

30.09.2017

Half Year Ended

31.12.2017

 

 

(Unaudited)

(Unaudited)

(Unaudited)

1.

Income from operations

 

 

 

 

a) Revenue from operations (Net of excise duty)

13590.200

12252.100

38661.200

 

b) Other operating income

657.600

758.600

2026.000

 

c) Other income

169.100

380.700

925.100

 

Total Income from Operations (net)

14416.900

13391.400

41612.300

 

 

 

 

 

2.

Expenses

 

 

 

 

a) Cost of raw material and component consumed

9039.300

11869.000

30114.500

 

b) purchases of traded goods

0.000

0.000

76.600

 

c) Changes in inventories of finished goods,  work-in-progress and traded goods

2197.300

(1363.800)

747.900

 

d) Excise duty on sale of good

498.000

0.000

447.600

 

e) Employee benefits expense

591.200

461.200

1403.300

 

f) Depreciation and amortisation expense

1643.000

622.500

1816.700

 

g) Other expenses

1643.000

1662.600

4264.500

 

h) Finance costs

272.400

442.300

1156.000

 

Total Expenses

14241.200

13693.800

40027.100

 

 

 

 

 

3.

Profit before tax

175.700

(302.400)

1585.200

4

Tax expenses

 

 

 

 

Current tax

201.300

13.000

951.800

 

Deferred tax

(129.300)

(130.300)

(406.800)

 

Total tax expenses

72.000

(117.300)

545.000

 

 

 

 

 

5.

Net Profit/(Loss) for the period

103.700

(185.100)

1040.200

 

 

 

 

 

6.

Other comprehensive income

 

 

 

 

Items that will be reclassified to profit or loss

(14.500)

29.000

(107.000)

 

Items that will not be reclassified to profit or loss

(4.600)

(10.800)

(25.000)

 

Total other comprehensive income net of income tax

(19.100)

18.200

(132.000)

 

 

 

 

 

7.

Total comprehensive income for the period

84.600

(166.900)

908.200

 

 

 

 

 

8.

Paid-up Equity share capital (face value INR 5)

1326.100

1326.100

1326.100

 

 

 

 

 

9.

Other equity

--

--

--

 

 

 

 

 

10.

Basic and Diluted EPS for the period  (Face value of INR 2/- each) (not annualised)

0.39

(0.70)

0.82

 

NOTES:

 

1. The above financial results for the quarter / nine months ended December 31, 2017 were reviewed by the Audit Committee and thereafter approved by the Board of Directors at its meeting held on February 08, 2018. The Statutory Auditors have carried out a Limited Review of the above financial results for the quarter / nine months ended December 31, 2017.


2. The Company is principally engaged in a single segment viz., Steel products based on nature of products, risks, returns and the internal business reporting system.


3. This Statement has been prepared in all material respects in accordance with the applicable Indian Accounting Standards prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable.


4. The listed Secured, Redeemable, Non-Convertible Debentures of the Company aggregating to INR 2900.000 million (excludes transaction costs as per effective interest rate INR 0.640 million) as on December 31, 2017 are secured by first charge ranking pari passu by way of mortgage / hypothecation of entire immovable and movable tangible assets of the Company both present and future and second / floating charge on current assets subject to prior charge in favour of banks for working capital facilities. The Company has maintained hundred percent asset cover sufficient to discharge the principal amount of the said debentures in terms of Regulation 54 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The fixed assets cover is 3.57 times for total debts and the Credit rating by CARE for Secured Redeemable Non-Convertible Debentures issue by the Company continues to be "AA-".


5. Post the applicability of Goods and Service Tax (GST) with effect from July 1, 2017, revenue from operations are required to disclosed net of GST in accordance with the requirements of Ind AS. Accordingly the revenue from operations for quarter, nine months ended December 31, 2017 are not comparable with corresponding previous period presented in the financial results which are reported inclusive of excise duty.

 

 

CONTINGENT LIABILITIES:

 

Particulars

31.03.2017

(INR In Million)

31.03.2016

(INR In Million)

Claims against the Company not acknowledged as debts

114.370

101.260

Disputed direct taxes

295.280

385.350

Disputed indirect taxes

1413.940

1374.610

Note:

It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of above pending resolution of the respective proceedings.

 

The Company does not expect any re-imbursements in respect of the above contingent liabilities.

 

 

FIXED ASSETS:

 

Tangible assets

  • Freehold land
  • Buildings
  • Plant and machinery
  • Office and other Equipments
  • Vehicles
  • Furniture and fixtures

 

Intangible assets

  • Software

 

 

PRESS RELEASES

 

WELSPUN INDIA: INR 44000.000 MILLION INVESTOR WEALTH WIPED OUT AS MORE COS JOIN PROBE

 

Welspun India's shares were locked in the lower circuit limit for the third day in a row on Wednesday, after investors dumped the stock on fears that there is more bad news in store for the company, one of the world's largest textile manufacturers. In early trades on Thursday, the stock was down more than 1 percent.

 

The stock has fallen about 42 percent in the last four days after Target Corp's decision to terminate business with the firm for passing off cheap sheets as premium Egyptian cotton.

 

Welspun India's market capitalization as of Wednesday eroded by a whopping INR 43760.000 million from INR 103350.000 million on 21 August to INR 5958.000 million on 24 August.

 

Target said on Friday that it was severing ties with Welspun after its extensive investigation had confirmed that the Indian company, which purportedly used Egyptian cottons to make sheets and pillowcases sold to the retailer, substituted non-Egyptian cotton instead.

Target is Welspun India's biggest customer after Bed Bath and Beyond. It accounted for about $90 million, or 10 percent of the company's total business in the financial year through March, Welspun executives said on a conference call on Monday.


Welspun said on the call that it was investigating the product specification issue and would hire one of the Big Four accountancy firms to review its supply processes.


Wal-Mart Stores Inc, Welspun's third-biggest customer, is also reviewing the company's cotton certification records, a report in the Wall Street Journal said.


"They are currently reviewing Welspun cotton certification records and plan to have additional conversations with Welspun. If we discover an issue, we will handle it appropriately," a PTI report quoted a Walmart spokesperson as saying.

A spokesman for Welspun said the company did not wish to comment on the reported Wal-Mart review.


The US retail giant accounts for about 8-9 percent of Welspun's revenues, according to Elara Capital analyst Sumant Kumar.


"The risk is there as these are still early stages, so we need to wait and see," Kumar said.


Sales of Egyptian cotton bedding account for only about 6 percent of Welspun's total sales, according to Kumar, but the loss to the company's credibility means other customers could withdraw all their business as Target has done.

According to a report in the Fortune magazine, retail giant JC Penny too is conducting a probe into the company's products.

“JC Penney is conducting a thorough investigation of its Welspun textiles to ensure the integrity of its product claims. It is too early in our review process to determine what actions may be necessary,” a company has been quoted as saying in the Fortune report.


A PTI report, meanwhile, quoted JC Penney spokesperson as saying that suppliers of private and exclusive brand products to the company are required to certify the quality compliance of any raw materials used. When sourcing Egyptian cotton, manufacturers must provide a certificate issued by the Cotton Egyptian Association as an additional measure of authenticity, the report said.


Swedish furniture retailer Ikea, however, has said that it will continue its ties with Welspun but is keenly watching the outcome of the investigations of other companies.


Even as Welspun is reeling under a "domino effect", as the Fortune puts it, after Target's decision, analysts have said Welspun did not provide clear answers during Monday's conference call, when asked whether other customers could follow Target's move to cut ties.


"They are actively engaged with our clients," Welspun's Managing Director Rajesh Mandawewala said, in response to that query on the call.


Kumar, in his note, said Welspun executives were vague on facts during the call, which threw up more questions than answers.

 

 

WELSPUN INDIA GETS TANGLED IN KNOTS

 

Aug 23 2016

 

Target terminates contract with Welspun India because the firm, according to Target, substituted Egyptian cotton with a cheaper variant while supplying bedsheets

 

Mumbai: 

Welspun India Ltd lost over INR 20000.000 million in market capitalization on Monday, after one of its largest customers, Target Corp. said it is in the process of terminating its business relationship with it. Target said in a statement late last week that Welspun substituted Egyptian cotton with a cheaper variant of cotton while supplying it bedsheets.

 

With a large number of shareholders queuing up to sell Welspun shares at the lowest permissible price for Monday’s trading session, it looks like the damage may end up being higher. A 20% circuit filter applies to Welspun shares in each trading session.

 

Target accounted for about 10% of the company’s revenues, with the product in question accounting for about 10% of the total Target business. The reason its supplier’s shares are falling by a much higher rate is the incident will lead to reputational issues, which can in turn result in loss of business from other customers as well. Welspun has said it will appoint an auditor to probe the charges.

 

But as can be seen from the reaction of investors, the clarification did little to assuage their concerns.

Also Read: Welspun stock down by 20% after Target snaps business ties

 

In addition to the fact that a tenth of the company’s revenues will soon vanish, the Indian company may have to bear some of the liability Target is facing in terms of refunds to customers who bought these sheets in the past two years, points out an analyst. The company was vague about the possibility of this on a call with analysts.

 

Also, the company is selling the same product to a few other customers. According to Welspun management, 3-6% of the company’s revenues come from this product. It is not clear how other customers will react to the development, although the prognosis by analysts is understandably grim. They feel these customers may ask Welspun to either reduce product prices or compensate them for the compliance issue. In a worst case scenario, they may cut ties with the company as well. The collateral damage that can ensue is what is making investors jittery.

 

About two-thirds of the Welspun’s business comes from the US. Compliance issues with one large retail client can create reputation issues, weighing on future contracts.

 

The revenue loss will mean that the company will not be able to achieve the “mid-teen” revenue growth guidance for the current year. At best investors can how hope for a flat revenue growth, provided other products baskets make for the loss of the revenues, analysts with a domestic broking firm says. Thanks to these healthy growth projections, the stock traded at around 14 times trailing earnings. Now, even after the 20% drop, valuations are still in double-digits.

 

 

 

 

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.

 

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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

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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

INR

US Dollar

1

INR 64.96

UK Pound

1

INR 90.34

Euro

1

INR 80.75

 

 

INFORMATION DETAILS

 

Information Gathered by:

SUP

 

 

Analysis Done by:

NIY

 

 

Report Prepared by:

ARC

 

 

 

SCORE & RATING EXPLANATIONS

 

DEMERIT POINTS

 

 

--BANK CHARGES

YES/NO

YES

--LITIGATION

YES/NO

YES

--OTHER ADVERSE INFORMATION

YES/NO

NO

MERIT POINTS

 

 

--SOLE DISTRIBUTORSHIP

YES/NO

NO

--EXPORT ACTIVITIES

YES/NO

NO

--AFFILIATION

YES/NO

YES

--LISTED

YES/NO

YES

--OTHER MERIT FACTORS

YES/NO

YES

 

 

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Credit Rating

Explanation

Rating Comments

A++

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Business dealings permissible with minimum risk of default

A+

Low Risk

Business dealings permissible with low risk of default

A

Acceptable Risk

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B

Medium Risk

Business dealings permissible on a regular monitoring basis

C

Medium High Risk

Business dealings permissible preferably on secured basis

D

High Risk

Business dealing not recommended or on secured terms only

NB

New Business

No recommendation can be done due to business in infancy stage

NT

No Trace

No recommendation can be done as the business is not traceable

 

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·         Financial condition covering various ratios

·         Company background and operations size

·         Promoters / Management background

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