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Pipe IndustryConnect the future through pipes

ContentsIndustry Snapshot ............................................................................................................................ 3Overview .......................................................................................................................................... 4Industry structure ............................................................................................................................ 5Key Demand Drivers of the Industry................................................................................................. 7

Demand and supply Mismatch........................................................................................ 7Demand Estimation:........................................................................................................ 7

Sources of Demand......................................................................................................... 8

Major Customers and Their Requirements ..................................................................... 8Key Demand Drivers ...................................................................................................... 9

Strategic Analysis .......................................................................................................................... 12

Industry Attractiveness ................................................................................................. 12Industry Competitiveness.............................................................................................. 13

Global Demand-Supply Scenario ............................................................................. 13

Export advantage ...................................................................................................... 14Import advantage ...................................................................................................... 15

SWOT ........................................................................................................................... 15Major Players of the Industry ......................................................................................................... 16

1 .Jindal SAW Limited ................................................................................................. 16

2. PSL Limited.............................................................................................................. 16

3. Welspun Gujarat Stahl Rohern Limited (welspun Gujarat)...................................... 16

4. Maharashtra Seamless Ltd (MSL) ............................................................................ 165. Ratnamani Metals & Tubes Ltd., (RMTL) ............................................................... 17

Financial summary of 2006-2007............................................................................. 17Conclusion ..................................................................................................................................... 19


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INDUSTRY SNAPSHOT

May - 2007

SWOT

INDUSTRY ATTRACTIVENESS PEER GROUP

OUTLOOK

The Indian natural gas sector is expected to witnessrobust growth in medium to long term. The supplydynamics of the industry has changed with recentgas discoveries along the eastern coast and LNGterminal. Thus to supplement the increasedavailability, it is imperative that gas pipelineinfrastructure be put in place. Pipelines infrastructureis made up of many components and out of thesescomponents, pipes make up for about 75 percent ofthe total.

So growth in natural gas will drive the growth pf pipesand tubes industry, which will have an investment tothe tune of Rs 325 billion expected in the next 3-4years.

INDUSTRY SCORE CARD

0 1 2

Current economic

environment

Industry

attractiveness

Growth Potential

Low Medium High

KEY INDICATORS

PE 14.13 NPM % 8.38%

CAGR % 34% Key Inputs Steel

No. ofcos.

10CriticalFactors

EnergyDemand

STRENGTHS Indian manufacturers are competitive in the domestic

market

Globally cost competitive with conversion costs of ~US$ 55/MT as against US$ 100/MT which will providegreat advantage in export market as well.

WEAKNESSES The demand of pips and tubes sector is derived f

growth of oil and gas in country if there is any delaexploration and production it will impact the growtthis sector.

OPPORTUNITIES The total global pipeline demand for transportation of oil

and gas over next 5-7 years is estimated at approx.200,000 kms which will open up new opportunities.

As production does not match the required demand of28,000 kms it will provide immense opportunity for thissector.

THREATS Threat of cheap import from other countries.

Rivalry among the firms

Threat of subsitutes

Entry barr iers

Bargaining Pow er of Buyers

Bargaining Power Of suppliers

Low Medium High

Company

Sales(Cr)

CAGR-%

OPM-%

NPM-%

ROE-%

JSW Steel 9337 39 30 14 26 Mah. seamless 1077 94 21 13 32 PSL 1539 73 11 3 15 Ratnamani Metals 350 161 18 10 39 Welspun Guj. Stah 1870 110 10 3 15


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Demand Drivers

Overview

A well-developed transportation network is essential for efficient and economical use of availablenatural resources including energy (oil and gas) and water sectors. Pipes and tubes are used invarious industries and applications, including oil and natural gas related products, oil refineries,petro-chemical plants, Oil Country Tubular Goods (OCTG) application and in mechanical,structural, chemical, automobile, water and sewage transportation and general engineeringindustries. So far, in India, transportation of petroleum products through pipelines has been lowerthan via roadways and railways.

This is in contrast with the international trend, where pipelines are the most preferred medium fortransporting petroleum products over long distances. However, of late, the emphasis on pipelinesis gaining significance in India as it offers a more eco-friendly and cost effective mode oftransportation. Further given the pace of development of Indian economy and its increasingrequirement of energy, the demand for energy is expected to increase significantly. This alongwith the changing energy map towards increasing gas usage is likely to give an impetus to thedemand for pipeline network expansion.

Moreover high oil prices leads to increased cash flow for oil and gas companies, which aredeployed into drilling activities to curtail demand-supply gap. The demand for seamless tubes isexpected to grow at a CAGR of 20% and above for next couple of years due to increased E&Pactivities around the world.

Demand Drivers

The total global pipeline demand for transportation of oil and gas over next 5-7 years is estimatedat approx. 200,000 kms. This gives an average global demand in excess of 28,000 kms perannum (assuming 7 years). The production however does not match the required demand of28,000 kms thus there is a huge demand and supply mismatch expected over the next couple ofyears.

DrillingActivities

Migration fromtraditionalmodes of

transportation,

E&P Activities


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Industry structurePipes and tubes are used in various industries and applications, including in water, oil and naturalgas and related products and sewage transportation as well as in oil refineries, petrochemicalplants, Oil Country Tubular Goods (OCTG) applications and in mechanical, structural, chemical,automobile and general engineering industries.

Pipes and tubes may be classified on the basis of their manufacturing process Seamless Pipes;SAW (HSAW, LSAW and ERW) and Spun pipes (DI/CI).

Different Types of Pipes and Tubes

Types ofpipes

Size Major rawmaterial

Domestic player Main Application

SEAMLESS 1/2-14 Billets MSL,ISMT,BHEL,REMY High PressureApplication MetalsGujarat, JSL Oil & GDrilling,

H SAW 18 100 HR Coils WGSRL, MIL, PSL, JSL Cross Country, LinePipes, Transport, LoPressure Application

L SAW 16 50 Steel Plates WGSRL, MIL, JSL Cross Country, LinePipes, and Water, foOil & Gas Transport

ERW Pipes 1/2 21 Steel Sheets MSL, WGSRL, JPL,Surya Roshni

Cross Country

- DI / CIPipes

3 39 Iron Ore +Coke toproduce PigIron

Electrosteel Castings,Lanco, Kalahasti,Kesoram, Kapilansh,Dhatu, Kalinga, Tubes,JSL

Water & Sewage anTransport for Oil & GTransport.

1. Seamless TubesSeamless pipes and tubes are used both in oil and non-oil sectors. Energy sector is the biggestconsumer of seamless tubes. Demand for oil is expected to grow at 1.6% CAGR over FY 2005-25 (Estimated) and that of gas at 2.3% over the same period. Following rising demand for oil andgas, the drilling activity is likely to grow at a much faster pace. Moreover high oil prices leads toincreased cash flow for oil and gas companies, which are deployed into drilling activities to curtaildemand-supply gap. The demand for seamless tubes is expected to grow at a CAGR of 20% andabove for next couple of years due to increased E&P activities around the world.

2. SAW Pipes (L SAW Pipes and Spiral Pipes)

The demand for Large Diameter Submerged Arc wielded Pipes(LSAW) and Spiral Pipes is drivenby oil and natural gas exploration and transportation activity in petroleum exporting countries andin key consumer countries. The total pipeline infrastructure in India for oil and gas is around18,000 kms. Currently, the crude pipelines in India covers approximately 8,000 kms and themajority of these are located in Western and North Eastern regions.

The total global pipeline demand for transportation of oil and gas over next 5-7 years is estimatedat approx. 200,000 kms. This gives an average global demand in excess of 28,000 kms perannum (assuming 7 years). The production however does not match the required demand of


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28,000 kms thus there is a huge demand and supply mismatch expected over the next couple ofyears.

Originally, this type of pipe was produced using electric resistance heating to make thelongitudinal weld (ERW),but most pipe mills now use high frequency induction heating (HFI) forbetter control and consistency. However, the product is still often referred to as ERW pipe, even ifthe weld has been produced by using the HFI process. Considered to have the lowest strength,these pipes are generally suitable for small-diameter sub-trunk and branch lines in oil & gastransportation. The pipes are also used for water and sewage transport.

3. Spun Pipes (DI/CI)DI Pipes are used in transportation of water and sewage. Fast growing population and risingpopulation level in country has resulted an increase in demand for safe water. This in turn hasincreased the demand for transporting good quality water from potential sources to distant citieswithout contaminating it. Given the increasing demand and low penetration of water distributionand sewage infrastructure in the country, the growth prospect for the sector is favorable. Indiahas 16% of the worlds population but is estimated to have just 4-5% of the worlds waterresources.

This is because of slow implementation of water supply project in India due to some issues on

funding of such projects. However, with the multilateral finance Institutions like ADB and WorldBank, recognizing the need for pipeline network for transmission of water in recent times, coupledwith increasing focus of the Central Government, State Government and local bodies the pathhas been cleared for the development of the infrastructure. The demand for DI Pipes is expectedto grow at a CAGR of (app.) 15% for next couple of years.


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Key Demand Drivers of the Industry

Demand and supply Mismatch Submerged Arc Welded (SAW)

The total installed capacity of the major players in the SAW pipe segment would be around 9000kms based on the corresponding tonnage capacities announced by industry players. The averageutilization level is around 60% of this capacity implying a production of 5400 kms per annum, outof this around 60% is exported i.e. 3240 kms are exported. The domestic supply is limited toaround 2160 kms per annum.

The average domestic requirement is expected to be around 4000 kms for next five years, even ifthe companies were to decrease the share of exports as a percentage of revenues, the pipedemand would be huge and the domestic capacity available would still not be enough to cater tothe sort of expansion being envisaged.

Seamless SegmentWe expect sustained demand for seamless tubes as various oil companies undertake exploratorydrilling of areas totaling 1 mn sq ft in aggregate. In addition, development drilling is likely to

proceed in the blocks where oil and gas have been found.

In addition to this, huge investment is expected to be made in power, bearing and automotive andengineering industry where seamless tubes (for boilers) have major applications. The growth inthis sector is expected to be around 20% per year for next 5 years.

Demand Estimation:Type Total

requirementfor nextyear(milliontonnes)

Averagerealization pertonnes (USD)

Totaldemandover nextfiveyears(USDbn)

Key assumption

SAW 4.0 1000 4 15,500 km of pipeline and300 tonne per km.

Seamless 3.0 1100 3 900,000 meters of drilling inIndia every year. Seamlessrequirement 0.5 tonne permeter

ERW 1.4 800 1 36,000 km of pipesrequirement with 38 tonnes/km

DI/CI 1.5 700 1 300,000 tonnes of demandper annum

Total demand in India 9

Less demand met to bemet through imports (25%of total demand)

2 We estimate demand for4,000 km of Reliance'sKakinada- through exportsHazira pipeline


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Sources of DemandDemand from the domestic market is expected to surge exponentially in the wake ofa) An upswing in E&P activity in India,(b) A urgent need to create cross-country infrastructure for energy transportation, and(c) Increased focus on water transportation/ city gas distribution infrastructure.

Demand for Transportations in next five years

Existing (kms) Expected additions (kms)Crude 7,810 1,500Products 8,864 5,000Gas 9,988 9,000Total 26,662 15,500

Sources: CRIC Inrfa

Major Customers and Their Requirements

The major customer of this sector includes GAIL, IOC, GSPCL and GGCL. Gas Authority of India Ltd (GAIL) is the countrys largest gas transmission and marketing

company. It currently owns and operates around 58 per cent of the onshore gas pipelinenetwork, with over 5,390 km of pipeline concentrated mainly in northwestern India, butspread over all the regions of the country.

IOC laid the first crude pipeline from the Digboi oil fields to the Digboi refinery. Subsequently,a number of product and crude pipelines were laid in the 1960s, 1970s and 1980s, includingsub-sea crude oil pipelines. The crude pipelines transport waxy indigenous crude as well aslow-sulphur and high-sulphur imported crude.

Existing players in Pipeline Network

(km) Onshore Offshore Total

GASGAIL 5390 0 5390ONGC 1079 671 1750OIL India 213 0 213GSPL 433 0 433GGCL 1600 0 1600Asam Gas 600 0 600Others 2 0 2Sub Total 9317 671 9988OilONGC 2232 821 3053Oil India 1538 0 1538IOC 2791 22 2813HPCL 11 0 11Pvt/JVC 187 208 395Sub Total 6759 1051 7810Total 16076 1722 17798


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Key Demand DriversThe demand of pipes may be classified into the following major segments:

Usage of Pipes and tubes in various categories

Source: (Annual Report)

ENERGY SECTOR

Growing energy demands of developed and developing countries have largely dictated the healthof the oil & gas pipe industry. Transnational lines that traverse thousands of kilometers, like theNorth European Gas Line from a remote corner of Russia to stable markets like Germany/France,Myanmar-India, Iran India notwithstanding political compulsions have generated demand forpremium quality large diameter pipes like never before. Hectic drilling activity in offshore fields

perhaps due to the fact that the crude is around $ 70 /per barrel and still going up, has resulted inhuge casings/tubings and other pipe requirements. The offshore lines linking thesefields/marginal fields to main hubs have resulted in huge demand of such pipes.

1 .OIL & GASAs the world witnesses record high prices for oil, there is mounting pressure on all major oilproducing and consuming nations to secure long-term supply contracts. The Indian Oil & Gasindustry are preparing themselves to secure sustainable energy sources for long-term andmedium term. Keeping this in mind the Government of India has announced the NationalExploration Licensing Policy (NELP) for stimulating exploration activities both in offshore shelfsand within the country. More oil discoveries in the country and worldwide will require oil productsto be disbursed quickly and efficiently thereby increasing the demand for the steel pipes.

Recently Oil & Gas pipelines have been awarded the infrastructure status and with thisrecognition we estimate a huge jump in the Oil and Gas pipeline requirements .It is estimated thatthe expected demand from the oil and gas sector in India would be about 25,000 km of pipelinesover the next 10 yrs and the global demand for SAW pipes is expected to grow to 100,000-120,000 Kms with a annual domestic demand is expected to grow to 2500-3000 Kms for thesame period over the next 5-7 years. Even if 50 per cent of the projects fructify in the giventimeframe, the domestic pipe companies will witness a quantum jump in business opportunity .Domestic manufacturers are expected to capture almost 100% of these domestic opportunities,as imports of such pipes may not be cost effective due to current import tariff and logistics.

Pipe Sector

Seamless

Energy

E&P in Oil

and Gas

Water & sewage Transport

LSAW

Transportation of Natural Gas

HSAW DI/CI HSA

ERW ERW


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A look at the statistics below would show that as on date transportation of oil and natural gasthrough dedicated pipelines currently constitute only approximately 32% of the total oils andnatural gas transportation in India, significantly lower than the penetration in many developedcountries.

Share of Pipes and tubes in total oil Transportation

India 32% USA 59% Global75%

2. Natural GasIndia produces about 90 million standard cubic meters of natural gas per day as against its daily

demand of 120 million standard cubic meters that is likely to go further in the coming years. Theprojected demand of natural gas in India by 2020 stands at a staggering 400 million standardcubic meters a day. Though some of this demand will be met domestically, a large gap wouldremain. Based on plans announced by major Oil & Gas majors and in line with the PetroleumMinistrys Hydrocarbon Vision statement 2025, the domestic demand for SAW pipes is expectedto grow exponentially in the next 5 -10 Years.

India currently has about 15,000 km of pipelines transporting crude oil, refined products and gasin the country. Domestic investment in the pipeline infrastructure has been quite low, particularlyin gas pipelines, due to lack of gas supply. However, due to recent gas finds such as the Relianceand Gujarat State Petroleum Corporation Ltd. (GSPCL) gas finds in the Krishna Godavari Basin,India will require increased investments in pipelines as gas will need to be transported to areas ofconsumption.

Area covered under Pipeline in various countries

Increased availability of natural gas in northern and western India should spur improvedinfrastructure for gas transportation. In view of these developments, players such as Gas

Authority of India Ltd (GAIL), GSPCL, ONGC, Cairn and Reliance have proposed investing in anadditional 20,300 km in pipeline infrastructure over the next five years. The proposed pipelinerequired for meeting the demand is given below in map

15000Km India

170,000Km France

329,600 Km US


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Proposed Pipelines Network in IndiaNote: No of Pipelines indicate Volume (mmscmd) of gas to be transmitted/transportedSource: Crisil


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Threat of Substitute: - LowThreat of substitute is low asRail and Road as mode oftransport for oil and gas iscostlier by 125%.

Strategic AnalysisStrategic AnalysisStrategic AnalysisStrategic Analysis

Industry attractiveness

Rivalry Among the

Firms: - Low

Expected robust demandhas left negligible possibilityof rivalry. As its expectedthat annual domesticdemand is expected to growto 2500-3000 Kms for thesame period over the next 5-7 years

Barriers to entry: - High

Insistence track record of globalmajors & rigorous qualityapprovals restricts newentrants.

Bargaining power of Buyers: -

LowA consolidated Global pipeindustry leaves limitedbargaining power withcustomers.

Bargaining power ofSuppliers: - Medium to High

The raw material of this sectorincludes Steel and copper inwhich very few manufacturerexist .So it will createreasonable pressure to themanufacture of this industry.


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Industry Competitiveness

Global Demand-Supply ScenarioThe total pipeline demand is estimated at 1,94,883 km over next 5-7 years for oil and gas

transportation (SAW pipes), which gives an average global demand in excess of 27,000 kms p.a(assuming 7 years). The production however does not match the required demand of 27000 kms(Indias contribution over 35%), so there is a huge demand-supply mismatch expected over nextcouple of years. After this we expect new capacities to be added to fulfill the requisite gap.

Also the share of demand from Middle East countries to overall demand is as high as 40%, whichis the major market for domestic players as more than 70% of their exports go to these countries.

Global Demand Scenario

Region No. of Projects TotalLength

Average Length

No . % km miles % km milesNorth America 174 46 52,101 32,383 27 299 186Latin America 31 8 27,142 16,868 14 876 544Europe 47 12 20,341 12,646 10 433 269Africa 16 4 9,223 5,734 5 576 358Middle East and Asia 96 25 71,173 44,235 37 741 461Australia 17 4 14,853 9,230 8 874 543Total 381 1,94,833 1,21,096 511 318

Source: Simdex

According to IEA, the effects of the relatively high oil prices are likely to continue. Oil prices havefluctuated over the past several months primarily due to the disruption caused by hurricanes inthe Atlantic Ocean and a continued desire by refiners and major consumers to either build stocksof diesel or buy paper forwards against potential peak winter demands of diesel. Fluctuating

freight costs have also contributed to fluctuations in crude oil prices. The price of crude for May2007 deliveries has touched the level of US$64/bbl.

Energy sector is the biggest consumer of seamless tubes. Demand for oil is expected to grow at1.6% CAGR over FY2004-25E and that of gas at 2.3% over the same period. Following risingdemand for oil and gas, the drilling activity is likely to grow at a much faster pace. Moreover highoil prices leads to increased cash flows for oil and gas companies, which are deployed into drillingactivities to curtail demand-supply gap.

World Oil Demand(mn barrel per day)

77 90.4

106.7

121.3

0

20

40

60

80100

120

140

2002 2010 2020 2030

World natural Gas Primary Demand(bcm)

2622

3225

4104

4900

0

1000

2000

3000

4000

5000

6000

2002 2010 2020 2030

Source: World energy Outlook 2004


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Capex Survey (Bn $)

2005 2006 ChangeUSA 49 62 26.5%Canada 22 25 13.6%

Rest of the world 139 166 19.4%Total 210 253 20.5%

Source: Tenaris

Demand for the seamless tubes is directly related to increase in oil and gas demand as they findapplication in oil and gas drilling as casing and drilling tubes. Recent global trend shows thatusage of seamless tubes in OCTG applications have increased significantly in 2003-2005.

Rising Global Demand for OCTG

2003 (%) 2004 (%) 2005 (%) CAGROilfield (OCTG) 44 46 53 9.8%Pipelines (risers, flowlines etc) 10 8 9 -5.1%

Process and Power plant 25 27 20 -10.6%Industrial & Automotive 21 19 18 -7.4%Sales Volume (mn tons) 22.7 26.46 28.7 12.4%

The demand for seamless tubes is expected to grow at a CAGR of 20% and above for nextcouple of years due to increased E&P activities around the world on the back of rise in global oilprices

Export advantageMajority of the global capacity is concentrated in Europe and Japan, which primarily caters totheir regional demand. Domestic Manufacturers have started making inroads internationalcontracts, as Indian quality is getting widely accepted. Indian manufacturers basically cater to the

pipe requirement of the Middle East Countries mainly due to following competitiveness vis--visother global manufacturers. Middle East is a high demand area, with no significant local manufacturing Indian suppliers with proximity to Middle East stand to benefitLower production costLower freight ratesFlexibility in supply schedules and order sizesIn-house coating plants permit higher value addition

Export Advantage of Indian Manufacturers

US$/ton Indian Mfr Foreign MfrPlate 750 750

Freight on Plate 40 20Import Duty 0 0Production Cost 55 100Freight on Pipe 40 80Total 885 950Source: MAN Inds


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Import advantageIndian manufacturers are competitive in the domestic market even without any import duty mainlyon the following grounds. Globally cost competitive with conversion costs of ~ US$ 55/MT asagainst US$ 100/MT.

MT for international players

Lower labour costs, and costs of consumables a key differentiator Higher freight on pipes (as compared to sheets) adds to the advantage Indian manufacturers able to compete on flexible delivery schedules can deliver pipes at sitesin India as per laying program.

Import Advantage

US$/ton Indian Mfr Foreign MfrPlate 750 750Freight on Plate 40 20Import Duty (@ 5%) 35 0Production Cost 55 100Freight on Pipe 0 70

FOB Cost 880 940Import Duty (@ 10%) 0 95Landed Cost of Pipe 880 1035Source: MAN Inds

SWOT

STRENGTHS Indian manufacturers are competitive in the

domestic market Globally cost competitive with conversion costs of

US$ 55/MT as against US$ 100/MT which willprovide great advantage in export market as well.

WEAKNESSES The demand of pips and tubes sector is deriv

form growth of oil and gas in country if there is adelay in exploration and production it will impthe growth of this sector.

OPPORTUNITIES The total global pipeline demand for transportation

of oil and gas over next 5-7 years is estimated atapprox. 200,000 kms which will open up newopportunities.

As production does not match the requireddemand of 28,000 kms it will provide immenseopportunity for this sector.

THREATS Threat of cheap import from other countries.


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for higher diameter (7" to 14" ) seamless pipes the company now further plans to triple itsinstalled capacity of higher diameter seamless pipes from 100,000 MTPA to 300,000 MTPA in aphased manner with minimal of capex of Rs 600 mn. In addition to the above, MSL is alsoexpanding its installed capacity for seamless pipes of up to 7" diameter from the present 125,000MTPA to 200,000 MTPA. The company is expected to invest Rs 250 mn over the next two years.

5. Ratnamani Metals & Tubes Ltd., (RMTL)Present operation -The Company has also undertaken job of drawing pipes. The company is amulti - product, multi location providing the complete piping solutions to the diverse range ofIndustries. Sector Steel Large RMTL, mainly present in two segments i.e Carbon Steel (CS),Stainless Steel (SS). The company caters to niche markets of almost all the emerging sectors likeOil & Gas, Refineries, Petrochemicals, Power Plants and Water Distribution systems.

Future Plans- The Company is planning another 60000MT of ERW capacity expansion. Thedetails of the project have not yet been finalized. 200.0. The burgeoning demand from the userindustries of SS pipes and CS pipes is likely to sustain the growth momentum of the company.

Financial summary of 2006-2007

Unaudited financial results of major Player of Pipe and Tubes Manufacturer

Jindal Saw limited

2nd Qtr200703(Rs

in cr)

% ofNet

Sales

2nd Qtr200603

% ofNet

Sales

VAR[%]

FullYear

200609

FullYear

200509

VAR[%]

Net Sales 1269.1 100.00 953.19 100.00 33.1 3855.67 2313.62 66.7

Total Expenditure 1123.1 88.50 845.22 88.67 32.9 3445.74 2046.46 68.4PBIDT 149.17 11.75 109.82 11.52 35.8 441.4 281.6 56.7

Interest 29.05 2.29 25.93 2.72 12 126.16 94.7 33.2

PBDT 120.12 9.46 83.89 8.80 43.2 315.24 186.9 68.7

Depreciation 13.87 11.55 12.01 14.32 15.5 51.9 35.42 46.5

Tax 36 2.84 24.75 2.60 45.5 87.14 50.75 71.7

Profit After Tax 70.25 5.54 47.13 4.94 49.1 176.2 100.73 74.9

Source : Capitaline

Company Sales(Rs incrores)

Sales in(CAGR forFY03-FY06)

OperatingProfitMargin(%)

DebtEquityratio(intimes)

CMP ASon04/06/07(In Rs.)

P/BVratio

P/Eratio

Orderbook in(LatestApproxin Rs.mn

Jindal Saw 3772.91 81.7852 10.26 1.3 576 1.71 9.43 4856

Mah. Seamless 966.18 36.0363 19.66 0.83 598.90 4.71 14.33 850

PSL 1433.25 57.6912 8.82 3.09 238 3.13 17.46 150

Ratnamani Metals 319.12 55.5928 16.26 1.18 889.95 3.42 8.42 180Welspun Guj.Stah 1787.99 67.3199 7.67 1.51 177.20 2.37 19.28 2509


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Welspun Gujarat stahl Rohern limited (Welspun Gujarat)

3rd Qtr200612(Rs

in cr)

% ofNet

Sales

3rd Qtr200512

% ofNet

Sales

VAR[%]

FullYear

200603

FullYear

200503

VAR[%]

Net Sales 740 100.00 455.6 100.00 62.4 1829.8 1038.5 76.2Total Expenditure 644.7 87.12 423.8 93.02 52.1 1664.3 970.2 71.5PBIDT 95.8 14.86 30.2 7.13 217.2 167.4 94.5 77.1Interest 19.2 2.59 8.7 1.91 120.7 41.9 20.3 106.4PBDT 76.6 10.35 21.5 4.72 256.3 125.5 74.2 69.1Depreciation 12.2 1.65 8.3 1.82 47 35.2 24.1 46.1Tax 23.2 3.14 5.2 1.14 346.2 29 16.3 77.9Profit After Tax 41.2 5.57 8 1.76 415 61.3 33.8 81.4Source : Capitaline

Mah. SeamlessLtd (MSL)

3rd Qtr200612(Rs.

in cr)

% ofNet

Sales

3rd Qtr200512

% ofNet

Sales

VAR[%]

FullYear

200603

FullYear

200503

VAR[%]

Net Sales 342.63 100.00 270.77 100.00 26.5 966.17 769.41 25.6

Total Expenditure 256.38 74.83 207.62 76.68 23.5 758.02 640.83 18.3

PBIDT 94.1 27.46 68.94 25.46 36.5 226.23 140.55 61

Interest 0.59 0.17 1.57 0.58 -62.4 4.83 3.81 26.8

PBDT 93.51 27.29 67.37 24.88 38.8 221.4 136.74 61.9

Depreciation 4.22 1.23 4.48 1.65 -5.8 14.55 10.5 38.6

Tax 28.62 8.35 19.62 7.25 45.9 62.5 32.77 90.7

Profit After Tax 60.02 17.52 41.73 15.41 43.8 139.6 84.88 64.5

Source : Capitaline

Ratnamani Metals & Tubes Ltd., (RMTL)

3rd Qtr200612(Rs

in cr)

% ofNet

Sales

3rd Qtr200512

% ofNet

Sales

VAR[%]

FullYear

200603

FullYear

200503

VAR[%]

Net Sales 187.52 100.00 111.39 100.00 68.3 319.12 180.85 76.5

Total Expenditure 145.27 77.47 91.39 82.05 59 255.81 151.69 68.6

PBIDT 42.25 22.53 20.04 17.99 110.8 63.38 29.17 117.3

Interest 3.47 1.85 2.68 2.41 29.5 8.9 3.79 134.8

PBDT 38.78 20.68 17.36 15.58 123.4 54.48 25.38 114.7Depreciation 3.31 1.77 2.38 2.14 39.1 7.39 4.36 69.5

Tax 13.8 7.36 2.99 2.68 361.5 7.42 2.23 232.7

Profit After Tax 21.67 11.56 9.87 8.86 119.6 33.54 13.25 153.1

Source : Capitaline


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PSL Limited

3rd Qtr200612(Rs

in cr)

% ofNet

Sales

3rd Qtr200512

% ofNet

Sales

VAR[%]

FullYear

200603

FullYear

200503

VAR[%]

Net Sales 498.84 100.00 408.11 100.00 22.2 1539.06 1440.54 6.8Total Expenditure 450.92 90.39 364.39 89.29 23.7 1407.38 1356.56 3.7

PBIDT 53.94 10.81 48.48 11.88 11.3 149.29 103.5 44.2

Interest 13.44 2.69 19.71 4.83 -31.8 48.53 36.13 34.3

PBDT 40.5 8.12 28.77 7.05 40.8 100.76 67.37 49.6

Depreciation 11.65 2.34 12.79 3.13 -8.9 33.86 23.36 44.9

Tax 8.05 1.61 2.52 0.62 219.4 17.25 10.01 72.3

Profit After Tax 20.8 4.17 13.46 3.30 54.5 49.19 32.01 53.7

Source : Capitaline

Conclusion

Currently, exports are major ingredient of sales. But going ahead, improved domestic demandsfrom the new pipeline projects will provide strong domestic demand growth. The line pipemanufacturer will either have to increase their operating rates or will have to reduce exports, soas to cater to the new demand. In sum , the Indian pipe manufacturer have the ability to servicethe additional Rs. 244 billion worth of orders over the next 3-4 years.

Disclaimer

The information and views presented in this report are prepared by RR investors. The informationcontained herein is based on our analysis and upon Sources that we consider reliable. We,however, do not vouch for the accuracy or the completeness thereof. This material is for personalinformation and we are not responsible for any loss incurred based upon it.

The investments discussed or recommended in this report may not be suitable for all investors.Investors must make their own investment decisions based on their specific investment objectivesand financial position and using such independent advice, as they believe necessary. Whileacting upon any information or analysis mentioned in this report, investors may please note thatneither RR any person connected with any associated companies of RR accepts any liabilityarising from the use of this information and views mentioned in this document. The author,directors and other employees of RR and its affiliates may hold long or short positions in theabove-mentioned companies from time to time.Website: http://www.rrfinance.com/research.aspx

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Pipes and Tubes Sector