Clients confident even at $35 oil: Welspun Corp

Reema: In numbers volumes would be down?

A: Volumes would be down by about, as a matter of fact from 325,000 we are down to 251,000 tonne and in terms of revenue it was Rs 2,503 crore in the corresponding quarter of last year and it is now Rs 2,032 crore, but the margins have improved and margins have improved substantially because from sales of 325,000 tonne, our operating EBITDA was around Rs 325 crore and operating EBITDA is Rs 295 crore as against loss of 50,000 tonne of volume.

Mangalam: While the bottomline has shown a substantial improvement and that is also aided by Rs 57 crore worth other income as against Rs 28-29 crore that we usually see. What is this Rs 57 crore other income. Is it going to repeat in future?

A: The other income is primarily our treasury income. In our balance sheet we are sitting with about Rs 1,000 crore of cash, so the other income has augured well for our Indian standalone numbers because standalone we have made an operating EBITDA loss only because of Rs 52 crore of other income we are in black.

Mangalam: Is this going to sustain in the future?

A: Yes because it is a regular income. Money is still lying on treasury but going forward we would like to utilise this cash to repay our debt whenever there is an opportunity and we would like to bring down our net debt. 

Reema: It looks like FY16 is going to be a flat year but since the last time we spoke to you, crude prices have taken a turn for the worst barring the little bit of a rebound that we are sitting at. What is the outlook looking for FY17? Is there a possibility that FY17 could be worse for your company compared to FY16?

A: I must say that the kind of bullish attitude I might have shown before because I was actually meeting lot of customers and when the oil price, even at USD 35 per barrel, the transmission company or the trading company who basically earn their revenue on the basis of oil or gas they transport, they were bullish that even at USD 35 per barrel, we would say that we would build pipeline so that people would bring down their operating cost but I must say that when oil price has reached USD 26 per barrel people have taken a pushback approach, so people are cautious, they haven't stock up the projects as yet but we are seeing little bit of a slowdown in the projects.(Copy edited by Nazim Khan; interview transcribed by Mitali Mohite)