Pipe-maker Welspun Corp, part of the Welspun group, after ending FY24 with record revenue and exceeding its targets, expects to sustain that growth with demand across all its verticals, from the US, and a ramp-up in exports.
“We see strong outlook and visibility in our business verticals,” Managing Director and CEO, Vipul Mathur, told businessline. He added that historically the first quarter was always a bit slow and this year the General Elections had disrupted demand, “but we are faring well, and we would be able to catch up to where we want to be.”
The ductile pipes business, which completed a year of operations, and Sintex, which it acquired under the bankruptcy process, are both expected to be significant contributors to growth, Mathur said.
For FY25, the company has guided for an EBITDA of ₹1,700 crore, after having achieved ₹1,600 crore (excluding other income) last year.
Excerpts from the interview
In FY24, you had very good sales growth across all your segments. How has the current year started out and where do you see the most growth coming from?
We have started off well. Historically, the first quarter always has a little bit of a slower start, and of course, this year it got compounded with the elections. We are faring well; we will be able to catch up to where we want to be.
Welspun Corp’s line pipe business, where we make large diameter pipes for the oil and gas sector and for transporting water, has reached steady state. That is the mainstay of our business. We have presence in India, the US and Saudi Arabia. Out of the three geographies, two of the geographies always work very well in any year, though in some years all three geographies do well. They deliver the EBITDA. The ductile iron pipes business has just completed one full year of operations. We produced two lakh tonnes last year and that is a record start. This year, we are aiming to touch at least 3.5 lakh tonnes.
The third pillar is Sintex, which we acquired under IBC. In the first year of operations after acquiring it, we were able to log a revenue of close to ₹650 crore and almost 10-11 per cent of EBITDA. This business is bound to grow. From a stressed company, running into perpetual losses, in the very first year, we have been able to turn it around.
I think Sintex and DI Pipes are going to be significant contributors to our growth this financial year. There is strong demand for DI Pipes, while supply is falling short. We are ramping up our facilities consistently and we have a strong order book of 328 kmt.
You are a large player in the US market. How do you see the demand dynamics there?
The US is the largest producer of LNG in the world, and they will defend that position. And we are the number one pipes company there. The main business for us comes from the Permian basin, where they are drilling. They have to evacuate the gas from the Permian basin to the Gulf Coast. In the last two financial years, we have been busy with Permian pipelines – these are large diameter pipelines, and 800 miles of pipeline are required. We are seeing at least two-three pipelines in this region and at least one of them is likely to be concluded this year. With our track record of executing large projects, we are confident of booking new orders to ensure business continuity.
How is the demand in India?
Well, there is the domestic oil and gas business, and we also export. The oil and gas companies in India – primarily Indian Oil and GAIL – have projects every year and they are creating a gas grid and an oil grid. There are multiple players, but we get a good portion of that business. Then city gas distribution is a huge play, and we have pole position in that.
We have a plant which is used for exports. We export critical application pipes for deep offshore, server service and our plant is the only one of the top three in the world for all critical applications. This means we are approved by BP, Shell, Total, Aramco to supply their requirements across the world. We are seeing strong potential in the export market for critical applications in places such as West Asia, Australia, Latin America and South-East Asia.
What are your plans for the future?
For the future, we are foraying into plastic pipes with Sintex. There is a huge growth opportunity there. The plastics pipes market is expected to grow to ₹1.3-lakh crore by 2030 from ₹55,000 crore now. We have a technological tie-up with Rollepaal for the manufacture of PVCO pipes.