Welspun Corp Limited (532144) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q3 FY '23 Earnings Conference Call of Welspun Corp hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Abhineet Anand from Emkay Global. Thank you, and over to you, sir.

Thanks, Jorgen, and a very warm welcome to everybody. Today, we have the post results conference call for Welspun Corp. I will hand over the call to Mr. Salil Bawa, Head of Group Investor Relations. Over to you, sir.

Thank you, Abhineet. Good morning to all of you. I welcome all of you to the Q3 FY '23 earnings call of Welspun Corp. Present along with me today on this quorum are Mr. Vipul Mathur, Managing Director and CEO; Mr. Percy Birdy, Chief Financial Officer of Welspun Corp. I also have with me my colleague, Gaurav Ajjan, who leads Investor Relations for Welspun Corp. You must have received the results and investor presentation of the company, which are also available on the BSE and NSE as well as on the company's website, which is www.welspuncorp.com. As usual, we will start the forum with some opening remarks by our leadership team. We'll then open the floor for your questions. During the discussion, we may be making references to the presentation, which has been uploaded. Please do take a moment to review the safe harbor statement in our presentation. Should you have any queries that remain unanswered after this earnings call, you can reach out to us any time. With that, let me hand over the floor over to Mr. Vipul Mathur, MD and CEO for Welspun Corp. Over to you, sir.

Thank you, Salil. Thank you very much, and good morning, everyone. Welcome to our Q3 FY '23 conference call. I sincerely appreciate for taking time to attend this call, and I hope all of you are doing well. Let me run you through the key highlights of our performance during this quarter ended 31st December 2022. We commenced operations in our U.S. facility and have also started dispatches. As you know, we have a strong outlook and order book in the U.S. market. We are also ramping up sales for our state-of-the-art Ductile Iron plant and TMT plant, which got commissioned in this quarter. We have also received position of the specified assets of ABG shipyard. We are -- as we are committed to ESG, we have published our and maiden sustainability report and tax transparency report in this quarter. As regards to order book, we still have -- we have a very healthy order book of almost 928,000 tonnes and an active bid book of 1.7 million tonnes. For the quarter, the production and sales volume in line pipes for our total operations, including Saudi, was at 330,000 tonnes and 281,000 tonnes, respectively. For our India operations, the sales volume was at 126,000 tonnes. For U.S. operations, the sales volume was around 38,000 tonnes. And for our Saudi operations, the sales volume was around 118,000 tonnes. Let me give you some views on the outlook and a brief update as to where do we see the 3 geographies in which we are present for the next quarters to come. Let me first talk about the Pipe Vertical. In the pipe vertical where we predominantly produced line pipes. The line pipe business has seen a robust performance with a global sales volume of 281,000 tonnes and an EBITDA of INR 202 crores for the quarter. The production in the U.S. has significantly ramped up and the dispatches again the projects have started in Q3. The full impact of this will be seen in Q4 FY '23 onwards. It is expected that 2023 will be another strong year for the oil and gas industry as consumption is expected to increase. According to IEA, global oil demand is set to rise by 1.9 million barrels per day in 2023 to a record high of 101.7 million barrels with nearly half the gain from China following the lifted of COVID restrictions. In addition, the EU will need to buy a lot more gas to refill its storage and will continue using oil products that is no longer available from Russia. Global oil prices are forecasted to average around $80 per barrel, which is a fairly healthy level and should spur further investments in pipeline. For India, the Ukraine crisis has reaffirmed the importance of energy security as governments around the world are trying to secure gas pipelines at affordable prices. The EU is pivoting away from Russia to other regions to secure the gas it needs. The current environment, along with a reasonably high energy prices will lead to a robust CapEx cycle in the oil and gas infrastructure globally. We are seeing a strong revival in various pipeline projects and are in active discussion for several export orders across the world with a focus on Europe, Australia, South America, Southeast Asia and Middle East. The Government of India has also set a target to raise the share of natural gas in the energy mix to 15% by 2030 from currently 6.2%. Various steps have been taken by the government in this direction, including expansion of national gas grid, expansion of city gas distribution network and setting up LNG terminals. PNGRB has authorized approximately 33,000 kilometers length of natural gas pipeline network across the country. Out of this 21,000 kilometers length of natural gas pipelines and operational, including 6,600 square meters of partly commissioned pipelines. In addition, there are 12,000 kilometers of metric gas pipelines which are under construction. We have seen a healthy demand from PSU oil and gas companies. The overall CapEx target for FY '22, '23 is INR 1,11,350 crores, for which INR 77,000 crores has been spent in April to December 2022. We expect a steady demand from these companies to continue for several years. There has been a revival in the water sector with a cooling off in the steel prices in the quarter compared to the previous year. We have seen increased demand across the state of Gujarat, Maharashtra, Tamil Nadu, Karnataka, Madhya Pradesh, Punjab and Rajasthan There are several schemes planned by both the central and the state government to ensure optimal sustainable development, maintenance of quality and efficient use of water resources to match the continuously growing demand across the country. As regards U.S., Europe energy crisis is expected to keep the LNG market tight for the next few years, supporting cash flow donation for the U.S. LNG players. Rising global demand for natural gas is a growth opportunity for U.S. LNG producers. But delivering on opportunity will depend on timely construction of natural gas pipeline infrastructure to support new U.S. energy supply. In 2022, the EU imports of LNG hit 101 million tonnes, which was a 58% surge compared to 2021 as Russian gas exposed to EU got shut down. Meanwhile, China reduced their domestic demand in 2022 allowed Chinese importers to redirect their contracted LNG volumes to the higher-priced European spot market and help Europe to avoid major shortages. A potential recovery in the Chinese market in 2023 will bring back the risk of natural gas supply in Europe. European demand may accelerate LNG capacity expansion in the U.S. This, in turn, would spur further capital allocation for constructing new pipeline capacity to connect the largest U.S. gas producing regions like the Permian basin to the new export infrastructure. Our HSAW plant in the U.S. is fully booked until December 2023. The current business environment is extremely conducive, and we are in active discussion to book new orders beyond 2023 for our spiral plant. Saudi Arabia. We have seen a very strong performance in our associate company, East pipe, EPIC with a 266% Y-o-Y jump in revenue and operational profit of SAR 61 million during the quarter. The outlook for the oil and gas sector in Saudi Arabia is encouraging. The Master Gas System Phase 3 is being planned by Saudi Aramco for transfer of gas from East to West in Saudi Arabia. Saudi Arabia is also trying to speed up conversion of a number of power plants from oil to natural gas. In that perspective, Saudi Aramco is extending the existing Master Gas System to Western Province in order to supply the power plants located there. The planned new pipelines and distribution network to be operated by Saudi Aramco will add to the existing Southeast pipeline capacity. Apart from above, Saudi Aramco is also keenly focused on developing their offshore infrastructure and are rolling out a plan, a 10-year plan in terms of development of their offshore infrastructure. This will also mean a substantial increase in the pipeline capacity and trends to come -- the demand for the pipes to come. SWCC is also investing in increasing its capacity to desalinate, transmit and store water to meet the increasing demand and further enhanced water supply security. Today, Saudi Arabia can store 21 million cubic meters, which is equivalent to 2.2 days of current municipal water demand. Projects are ongoing to expand storage capacity by 14% and the expansion of -- to a further 225% is planned to reach 7 days of strategic storage by 2030. On desalination, around 9 million cubic meters per day can be produced today. The market share of SWCC is around 66% of the total current production capacity and projects to increase desalination capacity by 60% are under construction. Moreover, Saudi Arabia plans to increase desalination capacity by 17.4% by 2030. Given the vast geography of Saudi Arabia, transmission of desalinated water to its demand center is of key importance. Today, around 13.9 million cubic meters per day can be transferred across the country. The capacity is currently being increased by additional 56% and a further expansion of 44% is planned by 2030. That's both Saudi Aramco and SWCC put together are showing a very robust sustainable demand for the next few years. Our associated company, EPIC recently announced signing contracts for the supply of steel pipe for water transmission with a total order value of around SAR 570 million with NEOM and PetroJet company. The huge thrust on oil and gas and water infrastructure will result in a strong demand for pipeline as we expect to win more orders in due time to come. Let me now shift to our another vertical, which is our Steel Vertical. The Pig Iron and the DI Pipes During the end of the quarter, we announced the commissioning of our Coke Oven in Anjar through Welspun Metallics Limited, a wholly owned subsidiary of the company. The Coke Oven has a production capacity of approximately 210,000 tonnes per annum, which will primarily be used in the Blast Furnace for manufacturing of hot metal. This will help with continuous supply of high-quality coke at a very competitive cost to run the plant efficiently. This is a significant milestone in our quest to manufacture high-quality DI pipes. The Coke Oven is built with the latest technology and adherence with the highest safety and environmental standards. The EBITDA in this quarter for the Steel Vertical showed a loss of INR 34 crore as compared to the previous quarter, which was at a staggering INR 293 crores. We are ramping up production in a calibrated manner to ensure that we deliver pipes of the highest quality to our customer. In the month of January 2023, our production has already touched close to 10,000 tonnes of DI pipes. The removal of 15% export duty on Pig Iron has also given a boost to selling -- the selling of DI pipes and Pig Iron in the market, in both domestic and the export market. We expect the financial performance of the business to significantly improve in the subsequent quarters. As a Pig Iron, sales will also get ramped up as the prices for the Pig Iron are also firming up and so as our capacity on the DI pipes has also significantly ramped up and we produce in January 10,000 tonnes of pipe, which is sort of a milestone in a start-up DI company if we see any historical data. To make provisions of portable tap water supply to every rural household of the country by 2024, Government of India in partnership with States is implementing the Jal Jeevan Mission [Foreign Language]. With an estimated outlay of INR 3.6 lakh crores. As on 20 January 2023, out of 19.36 crore household in the country, 10.96 crores households are reported to have tap water supply in their home. Overall, the demand environment is extremely robust. And as on date, we are already having a backlog of close to 88,000 tonnes of order valued at INR 665 crores. I now shift my focus to the billet and the TMT bars. Our newly commissioned state-of-the-art plant has started dispatches of TMT bars. The initial response has been extremely encouraging with a healthy traction both in the B2B and the B2C sector. We are creating a unique and industry-first digital platform for distributors, dealers, retailers and influencers. This will have a socioeconomic impact and will also help to analyze an early trend buying patterns of the consumer in every region. This can help our production and make supply chain operations more effective while staying customer-centric. Our key target for the TMT bars will be the state of Gujrat, where we estimate an annual demand of 3 million metric tonnes per annum, driven by the spending on housing and construction. Of this, approximately 2 million tonne is manufactured within the state and while 1 million tonne is procured from outside states. Thus, it opens up a huge opportunity for us to capture this market from our production facility. I also now try to draw your attention to our subsidiary, Welspun Speciality Solutions Limited. WSSL has recorded a turnaround in performance with a cash positive -- and they turn cash positive in this quarter. Going forward, the company expects its improved performance to sustain on the back of several new customer approvals, accreditations, development of new products and penetrating new markets. Pipe volumes were higher by 45% for Q3 FY '23 and 70% for 9 months FY '23, both compared to the corresponding period in the previous year. The total income was 175% higher for Q3 '23 compared to the previous year. EBITDA for quarter 3 stand at INR 9.4 crore versus a loss of INR 1.6 crores in Q3 of FY 2022. The total order book of WSSL for stainless steel bar stands at 2,134 tonnes, amounting to INR 60 crores and for the tubes and the pipes stand at -- the order book stands at 1,426 metric tons amounting to approximately INR 100-odd crores. The finance ministry has approved a gazette notification for antidumping duty on stainless steel pipes and tubes, Chapter 7304 imported from China. This is expected to significantly improve business prospects for our plants and for the -- all the mills in India. The BIS standard for seamless pipes and fuels, which is BIS 17875, has also been introduced, which is favorable for integrated players like us. The company has received accreditation certificate by BIS for a wider range of product grades and sizes. Let me also give you some other updates with respect to our acquisitions on ABG and Sintex. First, about ABG. The company has received the position of the mobile asset properties from the liquidator of ABG. Further, the company's wholly owned subsidiary, Nauyaan Shipyard Private Limited has received the possession. The partially built ships, equipment and metal scrap acquired under Nauyaan is estimated -- under WCL is estimated to be over 150,000 tonnes. It is estimated that the metal and metal scrap not required for the business purpose will be disposed over the next 12 to 15 months. We have already initiated the proceedings with respect to that and expect to see significant cash flow coming in from this state on a quarter-on-quarter -- for the next couple of quarters. During this period, we will also evaluate new business areas like defense, greenfield, offshore wind, and oil and gas structures to ensure optimal utilization of the asset. As regards to Sintex, Welspun's growth strategy entails creating a diversified product portfolio repurposing its business to add new target segments, expanding its offerings to add both B2B and B2C markets and making well-considered strategic acquisition. In this regard, as you know, we have acquired Sintex. We are in the process of acquiring Sintex BAPL, nonconvertible debenture with an outstanding value of INR 1,231 crore for the purchase consideration of INR 421 crore. This is already accomplished. The process of -- the whole process, as you know, it was under IBC, is nearing completion, and we are hopeful that it should be over in the next couple of months, but on or before quarter 1 of FY 2024. ESG, Welspun published its made and sustainability report for FY '21, 2022. The report is significant in helping WCL comprehensively reporting its sustainability performance across the environmental, social and governance domain. The report also highlights the progress made by WCL over its sustainability goals and in alignment with the global friar like the GRI, US SDGs and SASB standards. In addition, we published our first-ever tax transparency report. It is essential that we explain not only our compliance with tax laws and disclosure requirements and guidelines, but also our overall approach that sets the context for tax liability. The voluntary disclosures through the report rate that we strive to uphold the highest standard of transparency and governance. With this, I would like to conclude my opening remarks. I will be happy to take any questions. Now the floor is open for you guys. Thank you.

[Operator Instructions] The first question is from the line of Niraj from Arihant Capital.

This is Abhishek [indiscernible] . Congratulation on a good set of numbers. Sir, just a question on -- 2 questions. One is, why is the debt increase and it is because of the CapEx, which we are ongoing through? And how much -- when we are going to see the debt peaking out? Second question, on the Sintex BAPL side, are you seeing any challenges because as per our initial commentary, it was supposed to be completed maybe sometime in January, and now we are talking about Q1. So what is the reason for the delay? And what is the current state of Sintex [ debt ]?

As regards to your first question, you're absolutely right. The debt has increased from -- because of the CapEx cycle we have gone into. We have invested into our steelmaking facility, our DI making facility, our TMT, acquisition of ABG and acquisition of NCDs for the Sintex BAPL. So these were -- so these are the key factors for our debt increase at this point in time. And as this company will start operating and as they are ramping up their production, as you see, the DI pipe companies ramping up significantly. The steel plant is doing extremely good job at the -- the TMT business is also in the process of stabilizing. ABG acquisition has also taken place and the scrap sales will start in the next couple of days. And once Sintex also comes on board, I think so the debt will be -- you will see the gradual reduction in the debt, which will start happening. And as we have already said that it is our endeavor that we would like to again come back to debt-free level in the next 3 financial years. So we are absolutely focused on that. We have committed -- we have devised a clear road map for that, and we will be continuously monitoring and looking towards that. As regards to your second question with respect to Sintex BAPL, it is a process. It's a regulatory process. We are expecting that it can get over even before 31st of March. But just to be a little bit of a caution side, I'm saying that if it might slip by a few weeks here and there, it is quite possible because there are -- we have no control on the regulatory process. But as regard to process, I think it is moving absolutely in the right direction. And we are very, very hopeful and we feel convinced that this transaction will get close ASAP.

And can you throw some light on the ABG? What was our thought process now once we acquire like the ABG? And what growth we are doing, what is our plan of action going forward? And at any point of time, do you see any kind of opportunity like maybe a technical tie up with any global player at any point of time? Do you see this kind of opportunity for ABG also?

See, ABG, as you know, is a wonderful asset, right? Our first priority was to take the asset under control. That mission has been accomplished, number one. Number two, we are -- then we have embarked on the journey of seeing what is lying there, what is of use to us and what is not of use to us. So we have also completed that exercise. Now what is not used to us, we are -- we have created a separate team, which is completely focused on disposing of those things. So we would like to bring in that cash flow into our plan. On the business side of it, we are already -- we have already discussing with few reputed companies and consultants at what should be the best way ahead of the road map for us, which is value-accretive. We are exploring quite a few options. Option number one happens to be shipbuilding, ship repair. We are also looking at offshore marine substructure. We're also looking at it in terms of can this facility be converted into where we can have some green steel making facilities. So all these options are up on the table. And at this point in time, we are exploring each and every option absolutely in detail, so as to come out with a very clear cut road map for the next 3 to 5 years' time that what will be the best sustainable offering and which will be value accretive. So this is a work in progress. And as we will move forward, we'll keep you appraised about the same.

The next question is from the line of Vikash Singh from PhillipCapital.

First of all, congratulations on some of the smaller business unit turnaround. We were waiting for this for a long time. Sir, I want to understand one thing. What we have seen in the last couple of quarters or prior to that, our India order book has not been growing in a significant way. While if I look at some of your competitors, they have added the orders at a much faster rate than you. So just wanted to understand our strategy with respect to Indian list. Are we purposely keeping these mills free or we are just looking for a higher margin order? So what is our strategy here?

Okay. Vikash, I think so, thanks for the compliments on this turnaround and the turnaround is both in the smaller and the larger companies, both. The steel setup is a large setup and it is a great turnaround there as well. So I take that compliment. As regards to Indian pipe business, we have -- as you know, we have assets in Anjar. We have asset in Bhopal and Mandya. These are the 3 operating assets that we have in India. Primarily, our strategy is that from our Indian assets, we will -- we are trying to do a majority of the water business and a significant portion of the oil and gas business and CGD business. I think so from a volume perspective, we are seeing a consistent volume across all. The oil and gas business, we are -- if you see we have a consistent order book. From the CGD business also, we have a consistent order book. And even from the water business, we have a consistent order book. So in our Indian assets, which are servicing the Indian market, or there is a very consistent approach we have been following, number one. All what we have been holding back is our longitudinal pipe business, which is predominantly our export business and that business is a high-margin business. So what we are always trying to blend the Indian business and the export business together, so that we are able to make a higher EBITDA margins. This is what our strategy has been. This is what our strategy is. And likewise, this is whatever strategy is going forward. So at this point in time, I think so all the mills, which we have in our India are operating, none of them is idle. And I think so looking at the business prospects and the volume, I think they will continue to work on a quarter-on-quarter basis.

Understood, sir. Sir, in terms of our bid book, basically, which geography has a higher percentage in the bid book, if you could just give us some insight into it?

Right now, if you see from a bid book, we have a sort of an active bid book of almost close to 1.7 million. And today, of course, Middle East seems to be leading the pack. I think so we are seeing a significant business potential, which might be emerging from Middle East. We are also seeing the business -- a significant business coming up from Europe, and we are also seeing a substantial business coming from Southeast Asia and Australasia. So these are the 3 areas, which we are completely focused on. And if you see our track record we have been extremely active and extremely successful in these 3 areas. And fortunately, these 3 regions are showing a very, very strong demand over the next couple of years coming through, and that is getting reflected in this bid book.

Sir, just a small further clarification here. Given we have mill in Saudi also where we just -- Indian shareholder would have only 35% of the weighted. So this bid book, are these larger part is booked from a bit from the Indian mills or a larger portion would still go to Saudi and Indian mills would have to wait? So just wanted to understand because I believe this 1.7 million tonne bid book is for the entire group and not including Saudi?

So this what -- we are not talking Saudi here. We are not talking Saudi here. This is purely what we are talking, 1.7 million tonnes, we are purely talking, which could be a potential bid book addressable out of our Indian asset Saudi is over and above this. Saudi is a very localized domestic market. And with our presence out there, you know that we are doing extremely well out there and the prospect looks even better in the years to come. But this 1.7 million bid book refers to the addressable market, which we are looking to service out of India and of course, U.S.

Understood, sir. Sir, my third question with respect to your capital allocation policy. So since we have already now got the debt of roughly about INR 1,800 crores. Are we just looking to stop right here or there are further plans, which are on the pipeline? And what kind of the debt peak-out we would witness as per your internal assumption by when?

This INR 1,800 crore of net debt, what you are looking at this point in time is because of all the greenfield projects, what we are -- the acquisitions, what we have done. And this was -- and all these acquisitions we have discussed and deliberated in details in our past meetings that they were all thought through acquisitions. And we will -- once we have made these acquisitions over a period of time, this will start yielding benefits and it will lead to an incremental growth into the earnings of Welspun Corp. So that was the whole genesis behind it. Answering your question that are we -- at this point in time, we are pretty much done with our CapEx cycle. This is all what we would -- we have clearly set our platform together. We now have a fully operational pipe vertical. We now have a fully operational steel vertical. We will have acquired ABG, and we have Sintex. So these are the 4 verticals, in which we which we were determined to get into. We have bought into that. We have put our skin in the game. And beyond that, at this point in time, we are not thinking anything more other than that. Only operationalizing them and ramping up their operations and making money on top of that.

Understood, sir. Sir, just one last question, if I may. Sir, could you just give us U.S.-specific performance details, what kind of EBITDA or EBITDA per tonne they have done this quarter?

So in this quarter, U.S. produced close to -- they produce and rather dispatched close to 38,000 tonnes, if I'm not -- 38,000 tonnes of sales there and because they only started production sometime in September. So while the production started, the production ramp-up happened and then we have made a dispatches of almost 38,000 tonnes. And the bulk of the order, we will start now seeing the dispatches happening from Q4 onwards, going up to the Q3 of the next financial year. So the next 4 quarters, you will see the order book getting completely executed. In terms of earnings, I think so they made a modest EBITDA turnover of almost close to $7 million, around INR 55-odd crores in this particular quarter by the sale of almost close to 38,000 tonnes.

The next question is from the line of Yash from Sushil Finance.

I have a couple of questions. Firstly, congratulations on gross margins, which have improved significantly since the previous quarter and the previous years. My first question is, could you throw some light on other income, there has been a substantial fluctuation happening quarter-on-quarter? And secondly, there's a line item, other expenses, which have increased from approximately INR 140-odd crores to INR 358 crores year-on-year. So if you could throw some light on the bifurcation of the other expense, which is a major 2 components or major 2 heads, which are -- we are having those expenses? That would be great.

So if you see our other income in the 2 sequential quarters, I think in the quarter before that, in the quarter 2, we had other income -- we did -- we had the sale of asset at the edge. And it was -- and it was close to INR 104-odd crores, which came from the sale of our [indiscernible] . Also, there was a mark-to-market earning in the other income, which was close to INR 43-odd crores. So all put together, this was like close to INR 160 crores, INR 170 odd crores of other income that is why you saw that other income higher in the second quarter in comparison to the quarter 3. As regard other expenses, Percy will you take answer .

Other expenses include, of course, a lot of expenses, which are apart from the materials and the manpower cost. And as you know, we have a lot of businesses which are ramping up. so WML, WDI, AT&T, all these are new businesses and all the production expenses, everything is ramping up. So going forward, quarter-on-quarter numbers will be very difficult to compare for all of you because of the newer businesses, which will be ramping up. But on the whole, I think these are all the numbers, which are on the predictable lines and we add these new business -- we expect these new businesses to start contributing to the bottom line in the next few quarters.

Okay. And a follow-up question on the gross margin side, not the EBITDA level, EBITDA gross margins. Do we see the same level maintaining going forward? And have you absorbed the increase in raw material prices completely? Or do we see something happening in this quarter, coming quarter as well, some effects?

I think the -- whatever hit we had on the raw material side, which was predominantly on the coal and which everyone knows across the industry that hit came. So we also had that hit in the quarter 2. I think so that was almost fully absorbed in quarter 2. A residual impact of that was -- is seen in quarter 3. And -- but with that, I think so this history of any raw material impact coming into play, I think, so it's called completely addressed. So moving forward, the gross margin across the businesses are likely to go up only. And as the businesses are ramping up as their performance is happening as the dispatches, sales is happening and the market looks very promising. I am very confident that the gross margins over the next subsequent quarter is going to be better than what we have seen this quarter.

Just last one question, sorry. The government contracts and other contracts, which we have. So do we have a price escalation clause in those contracts going forward? Or like the -- some of your competitors are [indiscernible] for price escalation cost. So are you also opting for the same or how is it? Or was it already in place?

See, we -- the quantum of government contracts in our Indian business is only restricted to the business, what we do with the PSU, in the oil and gas sector, right? And that business is a fixed price contract. And where we always do a sort of a bidding on a back-to-back basis. So I think so we -- they are fully secured contracts or even the raw material is completely taken care of. So I don't think so that there is any impact on that, number one. Number two, when it is -- for the DI pipes, the DI pipes also has some component of direct contracts with the government. And most of the contracts now have been modified on a price escalation basis. So they are index-based pricing now, which is available. And so to that extent, completely insulated on the DI side of it. Earlier, it was because only on the pipe side of it. Now on the DI side of it, whatever is the government contract, they're index base. So from a raw material perspective, I think so on both the fronts, steel front and the pipe vertical front, we are completely insulated.

The next question is from [indiscernible] Kapoor from Kapoor Company.

I joined a bit late so sorry for any repetitive question, but firstly, if you could give me the debt number as on December on a constant basis?

So our debt number at the end of December on a consolidated basis, net debt stood at around INR 1,800 crores. So this is up from September quarter, which is about INR 1,600 crores. So we are up by about INR 200 crores, largely driven by the project CapEx. And we are approaching now the fag-end of completing all the project CapEx. So by this March, we will be completing most of the capitalization as well. So you may virtually say that this is the peak level that we are witnessing right now. And going forward, we will see improvements as our working capital will also get released more and more. And the project CapEx are also coming to an end.

Sir, and what is our capital working progress as on 31st December? And what is going to be likely for 31st March?

The capital work in progress is basically an entry, which will get capitalized and go to fixed asset. But I think your question may be more towards the CapEx cash flow. So I think as we stand today, maybe another INR 100 crores odd figure could be there pending for payouts towards the projected CapEx.

So how much we are going to capitalize as on 31st March and what is the working CWIP as on December, 31st December?

So by December, see, we have capitalized things like the Coke Oven was capitalized, the Sintex is capitalized. So the bulk capitalizations are done. On the DI side, also some of the mills are already been capitalized. Some capitalization will happen in Q4 as well. But this is, by and large, just the balance sheet entry between CWIP to fixed assets. And by 31st March, we'll complete all the capitalizations, majority of it.

Sir, when we look at now the new businesses and the profile of the company is totally different than what we were only subjected to a line pipe company. So sir, going ahead, as things get aligned, how will the revenue profile look like? If you could give us a ballpark percentage limits, how -- what would be the contribution from the various segments going ahead?

See, for -- as we say that we have -- now we have 2 verticals, the steel vertical and the pipe vertical. Pipe vertical will continue to be our main state, number one. And as you know, that it is showing -- we are seeing a very super tailwind on the businesses, both in the domestic and the global markets. So pipe business will continue to be our main state. And our new businesses, which are embedded into the steel vertical, I think as they are ramping up, they will also start contributing to that. If I have to say, I think to the rate -- in terms of back of the palm number if I had to throw. I think so that the ratios will still be close to 60% of our earnings and revenues would still be coming and our margins will still be coming from the pipe business. And the balance would be coming from the -- for the next 2 years will be coming from the steel businesses and other businesses. I am not -- I am currently discounting in this. The Sintex part of it because it will be improper to comment on that at this point in time. Because we will like to make a very judicious call and judgement and gave a clear guidance when we are in absolute control of things. So all what I'm saying about the 60-40 ratio is more on the current businesses on which we have full control.

And sir, what has been our investment to the Sintex part and the other vertical, how much have we invested? And what's the outlook going ahead? How will these investments will start securing to the P&L going ahead? What's the time line for it?

Sintex is close to INR 420-odd crores. So that's the amount we have currently invested into that at this point in time. And as Mr. Percy said, that now we are done with -- and as I also said that we are not done with our CapEx cycle. So all the CapEx which was supposed to happen has now happened both in the steel vertical, the DI pipe, the TMT mill, the ABG shipyards, the Sintex. I think so we are pretty [indiscernible] the CapEx cycle. And this is what -- the numbers what we have disposed broadly will remain the same now.

Sir, in particular to the investment in Sintex and ABG shipyard, how are these 2 assets align to our business model? And the total investment, INR 429 crore you mentioned for Sintex, for ABG, how much investment has gone through and what is lined up? And how are these 2 assets going to gel with our total business profile?

See, as Welspun Corp aims to diversified portfolio. So we have been a large B2B player, and we wanted to have -- we wanted to create a platform and wanted to have large B2C presence. And that was -- that is the rationale of bringing Sintex into play. And and we don't have to talk about this particular brand. I think so there is nothing anyone would like -- everyone knows about what sort of a brand pull it currently enjoys. So Sintex continues to be -- will be leading our B2C play. So synergetically from a pipe company, no synergy. But as Welspun Corp becomes -- is trying to become a conglomerate. So on one side, they will manage the pipe business. On the other side, we will try and -- we will manage the steel business. On the third side, there will be a shipyard, and the fourth side, we will have the Sintex. Coming back to the shipyard business, we see a huge synergy into that business because that's also a sort of a fabrication job ship building or ship repair and anything that you do on the offshore asset an offshore platform is more than -- is more or less like a fabrication business. And it is very phenomenous and very close to the business what we do on our pipe side of it, in our 5 verticals. And it seems to be a very high growth area at this point in time. And on top of it, the acquisition was fairly reasonable. So all put together, that made a very interesting proposition for the ABG shipyard. And we are very hopeful that over 3 to 5 years' time, we will make a complete turnaround of that, and in between that, whatever is our acquisition cost, we will like to mitigate it to the non-surplus items which are there and by virtue of liquidating that. So it makes a great synergy for our business.

Sir, our -- 2 small points. Our investment in ABG is total. What amount have we spent as of now?

So we are putting about INR 700 crores plus GST so far. And majority of it is, of course, for the scrap that we have gone more than 150,000 tonnes, including the partially completed ships. And we will try and monetize these assets as quickly as possible. So that will, of course, limit our investment exposure. And as far as the business plan is concerned, we will take our time. We will do our due diligence, and then we will come up with a complete proposal as to what do we do with these assets and how do we use them for our business growth.

One more question, then one for pipe. For Sintex and ABG, these 2 stories has been the leverage stories of the 2 promoters, wherein they could not manage the business for one or other reason, and both whether -- for ABG, it was a capital-intensive part and not to quote what was doing done by the promoter weather or not? And for Sintex also, it was exposure towards the government projects and [ rescale ] issues. So what are the 2 lending stories and compelling reasons for which other than getting things at a discount what would have made you people believe that these 2 are the potential to put together management bandwidth. Since that we have a large supply in the pipe segment, and we are also expanding -- we have already expanded in the DIP, which is still offering a lot of business opportunity. So trending towards these 2 unrelated segment, how -- what confidence and how is the management bandwidth in these 2 verticals at the time and energy that we spent would generate the same ROE and ROC the pipe segment in totality is what govern to?

I think, so you're asking a couple of questions here, Mr. Kapur. Number one, why were they not managed nicely by the [indiscernible] promoter, I don't think I intend to comment on that. There could have been various factors and so be it. As regards Welspun, number one, it is not that they were available to us at an attractive -- they were an attractive proposition. They were completely thought through stories thought through acquisitions and which clearly will be the next engine for fuel for our growth. We have -- Sintex is our play coming to the B2C -- is our player for the B2C segment. And we are completely focused to turn it around. We have a clear strategy around that. And we know that what type of brand it is, what can be leveraged from this particular brand? What is the penetration it has. It has more than 800 distributors, 13,000 retailers to create a platform and to have a platform like that into a B2C place is commendable. And I think so this is -- the one is the brand, other is the network. And then it could be leveraged into so many other things. So that was our whole contention of getting into Sintex, and we are very confident that it will be a clear turnaround story. ABG is -- ABG, why did it not operated well? I think so, it has -- also it has to do with the timing part of it. Probably that point in time, the government businesses, what were happening was the government or the PSU business was not very encouraging. Today, if you see the government -- this government's focus on Made in India, [Foreign Language] India and all that shipping -- all defense shipbuilding has to happen in India. I think to date there is a huge potential of shipbuilding, which is going to be there in the defense sector itself. If you see that all the government shipyards have an order book of more than 7 to 8 years. Now if they -- but their demand and the appetite of the government in terms of putting more ships into the water from a defense perspective is so high that there is a lot of business which is expected to come back to the private sector. And this is one of the genesis of which for us to look at the -- for the ABG shipyard. Not only this is genesis. But if you see the freight corridor across India, the water transportation in India and the corridor -- the economic corridor for the freight, for the shipping lines across India has significantly gone up. It has almost tripled over a period of time. So that necessitates a huge need for a timely ship repair. So this asset has -- this asset could be a potential -- a global effect in terms of ship repairs as well. Thirdly, we are also -- this asset is the only asset where offshore structures and offshore drilling rigs were -- it was compatible to make. The way things are panning out at this point in time, the way the offshore story the oil and gas story in offshore, the offshore structure story in oil -- in offshore, the drilling rig business in -- globally, I think so this is one particular asset, which has the competency and the capability to do that. So all put together, when we are seeing -- we are seeing a great potential into that, and that is the reason we ventured into that. Withstanding that the acquisition cost was fairly reasonable. So just to tell you, Mr. Kapoor, that it was -- it is no [indiscernible] creature. It is absolutely thought through with proper diligence and with a clear road map that we have put our hands into this game.

[Operator Instructions] We have the next question from the line of Radha from B&K Securities.

So first question in the line pipe business, could you give us a breakup of that 218,000 tonnes of sales for this quarter, India, U.S. and Saudi?

I think it was -- for our India, the sales was 126,000 tonnes. For our U.S. operation, it was, as I said, it was 38,000 tonnes. And for our Saudi operation, it was 118,000 tonnes. So that was the sales for this particular quarter, Q3.

And also the breakup for the order book, sir, 928 million breakup?

I think the breakup is very evenly split. We have almost close to in excess of 300,000 tonnes of business in India, close to more than 400,000 tonnes of business in U.S. and close to 200,000 tonnes of business in Saudi. So that's the broad breakup. Almost we have -- that brings us to close to 950 million to almost 1 million tonnes of business at this point in time.

Sorry, I could not get you. How much is you said in U.S. and Saudi?