COVID-19 and its associated demand destruction for crude oil between March-May 2020 created a challenging situation for the Welspun Corporation. It was forced to shut most plants and offices. With lockdowns lifting globally, demand for oil is picking up gradually, which should in turn drive demand for pipes supplied by Welspun.
However, in the domestic Indian market demand is expected to pick up steam post lifting of the COVID-19 related lockdown. Gas pipelines as well as irrigation projects are expected to uptick demand in the H1 FY21. Indian Oil plans to procure 400,000mt of HRC pipes according to the press release. The National Gas Grid requires about 14,700kms of additional pipelines to complete the project.
Total production of pipes stood at 417,000mt for Q4 2020, up 36.3pc from 306,000mt in the prior year period. For the fiscal year 2020, production was 1.62mn mt, up 30pc from 1.25mn mt in 2019.
Sales for Q4 2020 stood at 418,000mt, an increase of 13pc from 369,000mt in the prior year period. For FY20, sales were 1.5mn mt, an increase of 17.5pc rise over 1.25mn mt in FY19.
Saudi Joint Venture
The project continues with an order backlog of 2-3 quarters. Saudi Aramco may take half a year to begin large orders again, which will drive demand in the future. However, smaller orders for high-priority oil fields is expected to be tendered in the near future. Welspun expects orders to gain traction in the region.
Production of pipes stood at 289,000mt in Q4 FY20, up 43.7pc from 201,000mt in the prior year period. For FY20, production rose 56pc to 1.1mn mt over 989,000mt in FY19.
Sales for Q4 FY20 were 286,000mt, down 2pc from 292,000mt in the prior year period. For the fiscal year 2020, sales dropped 4.1pc to 1mn mt from 1.04mn mt in FY19.
EBITDA from total operations rose 26.3pc in Q4 FY20 to Rs336 crores while for the entire fiscal year, EBITDA rose 43.1pc to Rs1,284 crores.