Welspun Infra acquires 35% stake in Leighton Contractors

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Welspun Infra acquires 35% stake in Leighton Contractors

Pervez Umrigar of Welspun Infratech, in an interview with CNBC-TV18’s Sonia Shenoy, spoke about the latest acquisition that they have planned and future plans road ahead.

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Excerpts from After the Bell on CNBC-TV18 Watch the full show » ALSO READ See latest News about Welspun India See previous management interviews See what other Experts & Brokerages are saying about Welspun India Welspun India BSE | NSE 30/05/12 Are Mutual Funds betting on Welspun India?

Leighton, which specialises in engineering, procurement and construction (EPC) contracting and development of projects across sectors such as infrastructure, oil and gas, mining and building has the technical capabilities and expertise to augment Welspun's activities in the various segments of infrastructure development including roads, water, pipelines and ports.

Pervez Umrigar of Welspun Infratech, in an interview with CNBC-TV18's Sonia Shenoy, spoke about the latest acquisition that the Welspun Group has planned and future plans road ahead.

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: Could you tell us more about the acquisition that you have planned? How much do you plan to pump in and where will the funds come from?

A: The investment is in Leighton India, which has been a 100% subsidiary of Leighton Holdings till now. It is an Australian based growth. The investment is at Rs 470 crore for a 35% stake.

Q: Where do these funds come from? Will it be via debt or equity? Can you tell us more?

A: It's a mix. It is 1:1.

Q: Could you tell us more about this company? What is its market share currently? What will it bring to the table for you?

A: Leighton is the oldest international contracting company in India. It has been in India for 12 years. It has a play on the infrastructure and contracting scene, primarily driven by the objective of being a contractor. This is where it supplements Welspun which would like to position itself as an infrastructure developer in the field of transportation, energy and water.

Q: When do you hope to see any kind of contribution to the revenues? What kind of traction are you hoping to see?

A: Leighton has a topline of Rs 2000 crore right now. It has a very good record of profitability. The PAT is in the range of March 2010 was close to Rs 130 crore.

We expect to sustain at the same levels and then have a steep jump over the next year. It already has a track record of a technical and financial performance in the country anyway.

Q: Coming back to the money aspect, will it be 1:1 debt and equity? What is the debt on the books currently?

A: Leighton is a debt free company.

Q: Where will Rs 470 crore be pumped in from the Welspun group. In terms of the total debt on the Welspun group, what is it currently?

A: The loan is being taken in a separate SPA company, which is slightly less than 1:1. For Rs 470 crore financing, we are taking a loan of around Rs 220 crore. The balance Rs 250 crore is the equity coming from the group companies.