Welspun Enterprises Q3FY17 Concall Summary

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Performance Highlights

Welspun Enterprises Q3FY17 Performance

Infrastructure Business Update

  • The Company was first in the country to achieve financial closure for a Hybrid Annuity Model (HAM) Project, that is Delhi Meerut Expressway Package. It is a package of 8.716 kms within the State of Delhi.
  •  The Company has invested approximately Rs. 530 million in the SPV till Dec 31st, 2016. The work on the project is in full swing and is expected to be completed ahead of the scheduled completion date of May 26th, 2019.
  • On the appointed date, the NHAI was able to hand over 86% of the land, free of encumbrances and ready for construction
  • Approximately 6.5% of the work will be completed within the last 2.5 months
  • In the Oil & Gas business, the JV Company (Adani Welspun Exploration Ltd.) is the sole bidder for one of the gas-rich clusters in Mumbai High (B-9 cluster) under the Discovered Small Field bidding process and is awaiting award.

Settlement of Claims

  • The amounts that are expecting to receive from the settlement at Welspun Enterprises level is likely to be in the ranges of Rs.10 cores
  • Also settled another claim with MPRDC for a project called Khandwa-Hoshangabad and have received an extension of 158 days
  • The company has settled the claim with MPRDC, the amount of settlement has been agreed upon, this settlement of the agreement now converts into time

Stake Sale and Buy back

  • The Company is in the final stages of business re-organisation. In the Energy business, the Company has received shareholders approval to divest its 15.49% minority stake in Welspun Energy.
  • The company expects to receive a minimum sale price of Rs.276 cores upon sale being finalized and further sale proceeds are contingent upon occurrence of certain events in future
  • The Dewas Bhopal 13% stake sale have an agreement with IDFC to purchase it at a particular rate of interest on the holding
  • The shareholders have approved the company’s plans to buyback upto 25% of its share capital. The buyback would be at a price of Rs. 62 per equity share in cash for an aggregate BUSINESS UPDATE consideration not exceeding Rs. 2.7 billion. 

Future Plans

  • The company will continue to bid in Hybrid Annuity Project
  • Also evaluating the toll-operate-transfer (TOT) model that is being announced by the NHAI/Ministry of Road.
  • The company has future plans on the Oil & Gas side, going forward with the appraisal programs of the Kutch 1 and 2 block
  • About 32 Hybrid Annuity projects have been already awarded in the last year and there is a pipeline of more such projectss
  • Targeting to bid for 5 projects, out of which 3 have already gone out, 2 bids the company are targeting to bid within February, March

Expectation of Cash

  • The company expects the cash to be in the ranges of about Rs.896 cores to Rs.900 cores post energy sale and buyback.

 Revenue Expectation

  • The company have about Rs.950-odd cores worth of contracts in hand which will get completed over a period of next 18-months
  •  The company have a run rate of about Rs. 8 cores per quarter, so about Rs. 32-odd cores revenue from the BOOT assets
  • Each TCF currently gives a revenue of about Rs.5,000 cores and this is about 0.2 TCF is about Rs.1,000 cores
  • In terms of Delhi – Meerut the company expect the revenues from the project in the ranges of about Rs.775 cores odd
  • All projects are in ranges of Rs. 1,000 cores

 Foreign Entity

  • The entity called Intec Metals, the equity that they owned, got transferred from the demerger of Welspun Corp Ltd
  • Due to the transfer there is no relationship between Intec Metals and the Indian promoters