Minimum import price to help; impact yet to be realised: Welspun

Welspun Corp bagged an order for 200,000 tonnes pipes for an offshore project on the back of which the company’s orderbook went up to Rs 6500 crore from Rs 4500 crore.

Speaking to CNBC-TV18, BK Mishra, CEO and MD of Welspun said that the impact of minimum import price (MIP) is yet to be realized.

As steel prices have increased by Rs 1000-1500 post MIP, it will have a tremendous impact on the company’s numbers, he added.Below is the verbatim transcript of BK Mishra's interview with Ekta Batra & Anuj Singhal on CNBC-TV18. Anuj: Could you tell us the kind of order you have won, what it will do for your order book, your revenues and bottoline going forward? A: This is about 200,000 tonne of order from Saudi Aramco. It is Khursaniyah to Hasbah pipeline project and it is part of USD 1.7-1.8 billion investment which Saudi Aramco has decided to put. This is the second time I am talking to CNBC-TV18 in the last eight or ten weeks. Last time we talked about an order which we received from a new customer for first time, almost similar level and this time this order has even far greater importance to us because it is a reiteration of Welspun's brand value. This is one of the most difficult pipes that you could think of if you are in a large diameter pipe business. So this order is a reiteration of Welspun's capability. Ekta: Share some financials with us? What is the size of the order, what is your current order book, what will it take your total order book to and when do you start execution, when does this show numbers? A: With this order of 200,000 tonne, my order book transforms from almost 4,000-4,500 crore odd to about 6,500 crore today. However, to give you a perspective, this sale is more or less my last three quarters numbers. So as on today if you want to extrapolate, I already have an order booking which is as good as my nine months business. As far as the portion of order which is to be executed this year, it will be more or less executed this year maybe some quantity spilling into the next financial year but otherwise most of the orders would stand executed by this year. Anuj: The other thing that stands out and that you have been saying is the margin situation because you also believe that couple of developments like MIP may also aid your margins going forward. Last quarter you had fair bit of improvement on margins, do you see them settling in double digits? A: The MIP was announced few weeks back. The impact of MIP is probably yet to be seen in a full blown manner in Indian market although steel prices have increased by Rs 1,000-1,500, which gives us an opportunity to enhance our own plate mill business, which in any way we are expanding. I would say that because of the MIP, in the next four-six weeks time you would see the steel prices even getting increased and this would have tremendous impact on Welspun\\'s numbers primarily from the plate mill business. Ekta: What are you envisaging in terms of incremental orders right now? How much more is in the pipeline, how much have you bid for? A: Our bid book as a matter of fact still stands at around 4 million tonne which has not dropped. I must say that I have seen some of the projects taking a pause but with an order like Hasbah getting announced and somebody like Aramco taking a call. I think there is an indication that things have passed the worst and people have started making investment in oil and gas sector which is good news for a company like Welspun.