Welspun Corp Ltd (WCL) World’s Leading Line Pipe Manufacturer Investor Presentation 23 May 2016 SAFE HARBOUR This presentation and the accompanying slides (the “Presentation”), which have been prepared by Welspun Corp Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded. This presentation contains certain forward looking statements concerning the Company’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the Company. 2 1. Chairman’s address 2. MD’s address • FY16 – Delivering amidst challenges • Update on capex • Delivering on commitment AGENDA • Summing up 3. FY16 Performance 4. Outlook 5. Q&A 3 CHAIRMAN’S ADDRESS 4 Welspun India Limited Welspun Corp Limited #1 home textiles company in the world Global leader in large diameter pipes Welspun Welspun Energy Limited Enterprises Limited st India’s largest solar Winner of 1 Independent Power Hybrid Annuity Model Producer Project Revenue : US$ 3 Billion; Asset Base : US$ 3.2 Billion 5 WELSPUN GROUP – JOURNEY FROM FY14… EXIT FROM DELEVERAGING NON-CORE BUSINESSES SIMPLIFICATION IMPROVING OF PROFITABILITY IN CORPORATE CORE BUSINESSES STRUCTURE 6 WELSPUN GROUP – STRENGTHENING FINANCIAL PROFILE Net Debt / EBITDA Net Debt/Equity 5.00 1.40 4.50 1.20 4.00 4.54 1.22 0.97 3.50 1.00 1.01 3.00 2.64 0.80 2.50 2.00 2.63 0.60 1.50 0.40 1.00 0.20 0.50 - - FY14 (A) FY15 (A) FY16 (E) FY14 (A) FY15 (A) FY16 (E) 40 EBITDA 36 Cash profit 35 25 21 30 28 20 18 25 20 20 15 13 15 Rs In BillionIn Rs 10 10 In Billion Rs. 5 5 - - FY14 (A) FY15 (A) FY16 (E) FY14 (A) FY15 (A) FY16 (E) 7 WELSPUN GROUP COMPANIES - CREDIT RATING Long Term Short Term Welspun India AA- A1+ Welspun Global Brands AA- A1+ Welspun Corp AA- A1+ Welspun Energy A+ A1+ Welspun Enterprises A A1 As per CARE/FITCH 8 WELSPUN GROUP– BUILT TO LAST…….. LEADING TOMORROW TOGETHER DIFFERENTIATION INSTITUTIONALISATION BEING RESPONSIBLE Environment Friendly Innovation Management Empowerment Practices Technology Risk Management Caring for the Partnerships Financial Sustainability Community Prudent Capital Diverse Workforce Allocation Trustee to shareholders Dividend policy 9 WCL: OVERVIEW OF BUSINESS SCENARIO Volatile energy energy Volatile . Slowdown in developing economies . Volatility in energy prices . Russia, Brazil, China . Limited access to capital markets, market . India an exception especially for oil & gas players . Tightening monetary policy in U.S. Consolidation/ Shakeout in Oil & offset by loose monetary policy Gas players environment globally Global Global business Linepipe Market . Increasing entry barriers . Opening up of new markets Tailwinds . Delay in Final Investment Decision . Domestic market showing potential, (FID) both in water and oil & gas . Volatility in steel market inline with Headwinds commodity market Global: reach, Technical Investment in WCL pillars of clientele, Product capabilities & Balance Sheet human strength brand, supply portfolio track record resource chain 10 VISION 2020 Global leader & Revenue preferred choice of customers Innovation Technology $ 2 BN Global company Net Debt JVs/ Alliances NIL 11 MD’s ADDRESS 12 FY16 – DELIVERING AMIDST CHALLENGES 1+ million MT production/ sales for US facility fourth year in a row • Spiral mill was running at full throttle after • Order book stands at 913K MT it underwent a major revamp in H1 FY15 to improve productivity, enhance • Reported EBITDA up 9% YoY to Rs efficiency, reduce costs and reset the mill 10,349 million capabilities • PAT up 229% YoY to Rs 2,275 million Saudi Arabia facility Awards during the year • Executed first export order in FY15-16, • “International Safety Award with Merit" thereby increasing the geographical reach from British Safety Council, United • First ever 12/18/24 MTR Manufactured & Kingdom for 2015 FBE Coated Pipe exported out of • Dahej facility awarded “Prashansa Patra” Dammam Port for implementing Occupational Safety and Health (OSH) management systems and India facilities procedures • Pre-qualified for a complex project 22”OD • Anjar Pipe facility received “Certificate of & 39 mm WT X65 (D/T ratio of 14.3) – Appreciation for Good Practice in Quality more stringent than Independence Trail System for 2015” by FICCI Pipeline Project (world’s deepest) • Spiral mills were largely engaged in domestic water projects • Plate mill accessed the wind turbine and structural plates market 13 RESILIENT TO CHALLENGES, READY FOR OPPORTUNITIES • Automatic pipe dimension measurement system at LSAW, Anjar • Automatic tack repair Technology • Multiple pipe handling with “Cluster vacuum lifting system” to prevent handling damages for small diameter Pipes at Little Rock facility • OD welding station up-gradation for 1& ½ pitch welding (between ID & OD) at Damman facility • Total Productive Maintenance Quality • 7 S’ Implementation • Quality Circle & KAIZEN • Integration of Inspection and testing Automation/ NDE systems with SAP • Concrete Weight Coating Enhancing Capabilities • 12/18/24 mtr Manufactured & FBE Coated Pipe exported out of Dammam • ERW – 18 mtr • New client addition Client Engagement • CRM program under development and implementation • Engaging with customers for product development 14 UPDATE ON CAPEX 15 CONCRETE WEIGHT COATING PLANT Salient features • Pipe diameter/ length : 8”-56” / 9 – 18 mtr • Wall thickness: upto 38 mm • Concrete application method: Impingement • Maximum bare/ coated pipe weight: 15/ 40 MT • Concrete thickness: 30mm – 150 mm in single pass • PLC Controlled Batching Plant to ensure perfect mixing ratios • Automated Impingement coating plant with anode installation station. • Batching plant of capacity ± 250 Ton/hr (with density 3200 Kg/m3) 16 DELIVERING ON COMMITMENTS 17 WALKING THE TALK What we said Last Year What we delivered . Many large projects booked during the year were technically challenging - sour service, . Increasing market share in niche thickness, diameter products . Invested in CWC plant in JV with Wasco, Malaysia . Minimum capital expenditure . Capex restricted to Maintenance capex except investment in CWC . Strong Order Book despite the . Orderbook at 913K MT market conditions 18 SUMMING UP 19 BUSINESS SCENARIO – A MIXED BAG Challenges Opportunities • Tariff and non-tariff barriers favoring • New markets local players • Domestic markets • Extended project implementation • Water schedules by oil & gas players • Oil & gas • Delay in Final Investment Decision • Higher capacity utilization at Plate & closures Coil Mill with better margins • Short-term spike in steel prices • Higher competitive intensity 20 LINEPIPE DEMAND ACROSS GEOGRAPHIES Global Line Pipe demand North America (KMT excl. China & CIS) . LNG export terminals in USA – first operational; more to come . Focus on LNG export projects – Prince Rupert, Coastal Gas +17% Link 10,744 . Transnational gas pipeline projects from USA to Mexico 9,194 MENA . Heavy oil development . Enhancement of refining capacities in the region 2014A 2020E . Iraq-Jordan Crude export pipeline (Total over 1,100 KM) . Pipeline development in Kuwait . Saudi – substituting oil with gas for domestic consumption; emphasis on oil exports; increased demand for water pipelines . Opening up of Iran India & Asia-Pac . Doubling of gas pipelines infrastructure; activity has just begun Addressable market . ~2.5 million MT water pipeline projects expected in near future for WCL . Transnational projects – TAPI, Middle East to India . City gas distribution pipeline projects in multiple cities . Offshore development in Thailand-Myanmar region Source: Metal Bulletin Research 2015: The Five Year Strategic Outlook for the Global Large Diameter Linepipe Market 21 WALKING THE TALK What we said Last What we delivered Way ahead Year . Many large projects . Maintain