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Edited Transcript of WELCORP.NSE earnings conference call or presentation 8-Aug-19 5:30am GMT

Q1 2020 Welspun Corp Ltd Earnings Call

Aug 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Welspun Corp Ltd earnings conference call or presentation Thursday, August 8, 2019 at 5:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Percy Birdy

Welspun Corp Limited - CFO

* Vipul Mathur

Welspun Corp Limited - MD, CEO, BR Head & Director

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Conference Call Participants

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* Amit Zade

Emkay Global Financial Services Ltd., Research Division - Analyst

* Nirav Shah

* Nitesh Jain

* Rukun R. Tarachandani

Kotak Mahindra Asset Management Company Limited - Investment Professional

* Vikash Singh

PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Welspun Corp. Limited Q1 FY '20 Results Conference Call hosted by Emkay Global Financial Services Limited. (Operator Instructions)

I now hand the conference over to Mr. Amit Zade from Emkay Global. Thank you, and over to you, sir.

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Amit Zade, Emkay Global Financial Services Ltd., Research Division - Analyst [2]

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Good morning, everyone. I would like to welcome the management of Welspun Corp and thank them for giving us this opportunity to host the first quarter FY '20 earnings call.

I would now hand over the call to the management for their opening remarks. Over to you, gentlemen.

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Percy Birdy, Welspun Corp Limited - CFO [3]

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Good morning, everyone. This is Percy here. Welcome to our Q1 FY '20 results conference call.

I will start with the operational and financial performance. So as you would recollect, at the end of Q4 of FY '19, we have announced the divestment of our plate and coil mill as well as our 43-megawatt power plant. This has been just classified now as discontinued operations.

Please note that all the figures being discussed today are for the continuing 5 operations, unless specified explicitly, and prior year figures have also been adjusted accordingly.

The company continued on its robust performance during the quarter, and the key highlights are as under.

First operations. Recorded sales of 109,000 tonnes, delivering an EBITDA of $36 million for the quarter. This was one of the highest quarterly EBITDA in many years at the U.S. facility.

Saudi operations recorded highest ever quarterly sales of 138,000 tonnes. As guided in our last call, operations have turned PBT positive as well. Just to remind you, in the last quarter, the operations had turned EBITDA positive.

In [the] operations, Bhopal plant has been successfully commissioned. We have now a strong order book of 86,000 tonnes to be serviced from the Bhopal facility. All other manufacturing locations of the Dahej, Mandya and Anjar also enjoyed a robust order book, taking the total India order book to 666,000 tonnes.

Though Q1 witnessed a slowdown for known reasons we are confident of an improved operational performance from Q2 onwards, as the pace of project execution has picked up, consequent to the formation of stable government at the center.

Then we look at the balance sheet aspects. So on the deleveraging front, we continue to work on reducing our net debt. Net debt has now been reduced by an additional INR 90 crore during the current quarter, and at the end of June 30, it stands at INR 196 crore.

On our global order book position. Our current order book stands at 1,564,000 tonnes. That's 1.5 million tonnes, valued at INR 13,300 crore, in USD 1.92 billion. This robust order book provides us visibility for 12 to 18 months.

I will now quickly run through the key financial numbers for the current quarter.

Volumes. The quarter 1 volumes of pipe sales of our total operations, including Saudi, stood at 319,000 tonnes, 3-1-9, including 138,000 tonnes of Saudi plant versus 267,000 tonnes of the prior period, up by 19% Y-o-Y.

Total income from operations stood at INR 2,047 crore, up 35% Y-o-Y. Operating EBITDA after adjusting for treasury income and the MTM fair valuation impact on the bonds stands at INR 259 crores, up 49% Y-o-Y. Reported EBITDA stands at INR 242 crore, up by 24% Y-o-Y. Other income stands at INR 42 crores, which includes INR 20.5 crores of transactional ForEx gain.

Other expenses. In the current quarter, we have MTM fair valuation adverse impact on bonds of INR 36 crore, which is mainly for DHFL bonds. With this, we have provided for all the risky corporate bonds in our books. Other expenses also has transactional ForEx loss of INR 20 crore, which is in a way compensated by about INR 20.5 crores of transactional ForEx gain sitting in the other income.

Profit before tax and share of joint ventures stood at INR 148 crores, up by 63% Y-o-Y. Profit after tax, after [minorities and] share of joint ventures, stood at INR 126 crores, up by 138% Y-o-Y.

Cash PAT was at INR 179 crores, up 30% Y-o-Y.

Now coming to the balance sheet side. Debt at the end of June, net debt was at INR 196 crores, with gross debt at INR 1,107 crores, 1-1-0-7 crores, while cash and cash equivalents stood at INR 911 crores.

Company has prepared USD 25 million of loans in the U.S. subsidiary during the quarter, in addition to the other USD 25 million which we had prepared in the month of March 2019. The cash conversion cycle has further reduced to 14 days versus 18 days in FY '19.

Please note that this also includes trade advances that we have received from customers mainly for our U.S. orders.

Now we come to the Welspun Middle East joint venture, our Saudi operations. So as you will recall, our Saudi figures are brought in consolidated financial numbers at a single-line level after PBT as for the IND-AS.

The Saudi business has turned PBT positive during the current quarter with an EBITDA of USD 13 million and a PBT of USD 7 million. EBITDA per tonne is close to USD 94 per tonne in the current quarter. We expect the performance to further improve in the coming quarters.

Now I'll just give an update on the buyback of shares also. So the company's proposed buyback of shares has been approved by the shareholders. Consequent to the changes announced in the recent Union budget that came out on the 5th of July, the company has sought clarity from SEBI on the implications of the buyback tax and is awaiting certain clarifications or revised guidelines on the same.

With this, I would like to hand over to our MD for his comments on the market and company outlook.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [4]

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Good morning. Good morning, everyone.

Let me give a brief update on how and what we see as the market drivers for each -- the key market drivers for each of the markets which we operate in. So let me give a sort of a market overview with U.S.

The -- in U.S., we continue to see a higher fracking in the Permian basin and the resulting bottlenecks in the transportation of gas, which is coming out of this fracking. We are seeing major pipeline transmission operators still laying out significant plans to lay pipelines so that this capacity of gas -- additional capacity of gas can be offered to the producers. We have seen that -- we have been seeing this process for the last 1 year, and we continue to see a significant progress even moving forward.

With restrictions now being placed on imports, the [local] U.S. players, including Welspun, are expected to command a good margin with higher volumes.

Indian domestic market. If you look at the Indian domestic market, the large [diameter] demand for the pipes in the oil and gas sector is primarily driven by the [gas break] , which GAIL is developing, the oil grid, which IOCL is developing, and the last point connectivity to the city gas distribution, which is happening.

In the water sector, there are a couple of things which we need to note. In the recent -- recently, the government has announced a formation of a new ministry called Jal Shakti ministry, where their goal is to provide Nal se Jal to every -- to provide drinking water to just about everyone by year 2024. Further, we are also expect -- we are seeing momentum under the interlinking projects. I think, these 2 developments put together are going to result in a huge potential opportunity for all the pipe manufacturers active in the water sector.

We are also confident that our operational performance starting from Q2 '20 will get further momentum. And primarily, even if you recollect the quarter 1 performance has not been that exceptional for a simple reason that we have been into a phase where the Code of Conduct was in place, the elections were in place, new government was in place, thereafter, everything now seems to have settled down. The financial arrangements have been made by the state government, and the funds have started trickling into the whole state. So in the whole process, the Q1 has been a little lackluster performance, but moving -- as we have gone into Q2, we are seeing the pace of the projects is definitely faster.

The other aspect is exports of India. We are seeing a very strong demand outlook, both on the onshore and offshore oil and gas industry. We know that the crude price is still very strong. The crude demand is also very strong, and -- which we are also seeing. And if we connect the dots, we are seeing sort of a robust demand for the large pipes across all the geographies.

With Welspun's approvals and acquisitions -- global approvals and global acquisitions and with our impeccable track record for supplying pipes for complex oil and gas projects, we would definitely be beneficiaries out of the strong demand. And this peak, we are following up some major projects -- some major projects. And also, we are in the process of executing 1 or 2 key projects, the execution of which is going to be predicted in our Q2 performance.

As Percy mentioned about Saudi Arabia, all of you must have noticed that Saudi Arabia has been a complete turnaround story. We have been very worried about it, and we have been giving guidance to the market. But all the pain in Saudi Arabia is behind us. In Q4, we turned EBITDA positive, and in Q1, we are now order positive.

We still have almost 650,000 tonnes of an order book in Saudi Arabia, and which is likely to keep us busy for the next 2 years. On top of it, we are seeing a strong demand coming in from the oil and gas as well as water sectors, which is [expectedly] driven by Saudi Aramco and SWCC. And we are very optimistic that our order book is only going to improve from here on.

And the gas project, Bhopal project, the Phase 1 of Bhopal project, which was a pipe project, is fully commissioned. The commercial production has started. We have started executing orders from there. Now we are focusing on the Phase 2 of the project, which is a porting plant. And as advised earlier, we should -- we are absolutely on track, and we should be up and this plant would also be running by the end of December 30, 2019.

So Welspun being a global but local player with leadership position and with sizable capacities in India, U.S. and Saudi Arabia is ideally forged to benefit from local sourcing by the large oil and gas players. Also, recent measures of value unlocking of our noncore assets like plate and coil mill division and 43-megawatt power plant, has helped the company move forward on an asset-light model that's [suspending] the balance sheet and achieving improvements in our profitability ratio as well as return ratios.

With this, we conclude our opening remarks. We will now be happy to take any questions you gentlemen would have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have a first question from the line of Nitesh Jain from Birla Mutual Fund.

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Nitesh Jain, [2]

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Sir, I have a couple of questions. Number one is U.S. has basically lifted the steel and aluminum tariffs on Canada and Mexico, both the countries, sometime I think 3 or 4 months back. What sort of impact do you see on the U.S. pipe industry? I mean, is there any capacity of the long pipes in Canada and Mexico, which can actually come into the U.S. market and then eventually hurting the profitability or EBITDA of Welspun in the U.S.? This is question number one.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [3]

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Okay. Can I go ahead and answer?

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Percy Birdy, Welspun Corp Limited - CFO [4]

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Yes, please.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [5]

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Okay. So you're right, this 232 duties which have been imposed on Canada and Mexico was lifted under the new NAFTA agreement, what they have signed. Now from Mexico, in Mexico, there was no large diameter producer, so some -- even if that is lifted, it is not making any impact. In Canada -- however, in Canada, they're a large diameter producer and which has been bringing the pipes into U.S. And on them, this duty of 25% has been lifted so there could have been a potential that is -- there could have been some -- a little injury which could have come from Canada.

However, having said that, so what they have done is they have lifted the 232, which is the 232 duty, but they have not removed the counter-billing duties. The counter-billing duties still remains at 12.5% for any pipe which is going to come into -- from Canadian pipe coming into the U.S. So to that extent, there is still a [deference] which is existing, and I think so that's good enough for us to -- I don't think that is going to create any threat in the immediate future for our business.

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Nitesh Jain, [6]

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Sure. And second question is on the India business. So this quarter, can you elaborate what actually happened? Like how can so-called, I would say the stable scenario of demand, all of this then are volume drops. And in the opening remarks, Percy mentioned that the outlook is still very good. So can you elaborate what actually happened? Are there any deferment of some one [individual or last] couple of contracts? Or what is it like? Are there drops in volume in Q1?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [7]

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Okay. So let's say our order book in India is still at 666,000 metric tonnes -- 666,000 metric tonnes, that's the demand what we have. If you look at it, in which the domestic -- the domestic component is close to 430,000 tonnes, and the export component is 225,000 tonnes. So export component has -- is absolutely moving smoothly. Absolutely no issues around that. But in the domestic component, which is something like 430,000 tonnes, a majority of which is around 300,000-odd tonnes is a water part of it, and the balance is around the -- is the oil and gas -- domestic oil and gas around it. The challenge has been on to the water side of the execution. And this is the largest part.

The reason for the water -- the challenge on the water side execution has been because the government, while we had the order, but government was being in sort of election mode and the Code of Conduct being in play, all the financial disbursement being stalled, I think that is what has eaten away at the first quarter.

And now, the government has come in place, the state governments have started to send money into points of location so the projects have started happening. We will see this business is going to come back. But from an order book position, we still have that order with us. It is only the execution which got lagged because of the nonavailability of the funds. And you know that this is a typical period around when the election is -- election years, in election quarters. This is something which is very typical of that. So I think so that is all now behind us. And I think from Q2 onward, we've already started seeing in July. And as we speak, even in the first 7, 8 days of August, we are seeing a sort of robustness which is happening around that. And I think so that will continue to work.

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Nitesh Jain, [8]

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Okay. And lastly, is there any one-off item in the U.S. EBITDA because like $36 million appears to be very high? Or this is like a normal thing?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [9]

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Sir, you're right. $36 million EBITDA is like it is -- we have some inventories of KXL, which has been in line with us, and they have also started getting liquidity. They have also started moving also. There is definitely a little bit of a [limiting] value in this EBITDA as well.

But moving forward, I think, so as you know that the orders, what we have in hand are fairly profitable, and I think so we will continue to execute this way and to maintain also a similar amount of profitability in subsequent quarters as well.

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Nitesh Jain, [10]

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So would you see normalized EBITDA in the U.S.? Like in what range? Will it be like $200 per tonne or $250 or any kind of range?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [11]

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So our guidance, if you see, we have always given you guidance that our normalized EBITDA in U.S. will be close, in excess of $200 per tonne. And I think we are more than confident that we should be able to deliver that if not achieve that.

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Operator [12]

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We have next question from the line of Nirav Shah from GeeCee Investments.

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Nirav Shah, [13]

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Congratulations around good set of numbers plus the Saudi turnaround.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [14]

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Thank you.

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Nirav Shah, [15]

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So a few questions. Firstly, we have seen a decline in global steel prices. So for the Saudi operations, where it was a fixed-price contract, have we covered anything for, sir, near term -- in the last three, four months?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [16]

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So as we have always been maintaining, that was a very calculated call and very methodical call we have taken in the past. And the ballpark we have taken is -- the position what we have taken is now getting validated. There is a considerable slowdown in the steel pricing. And that is definitely helping us out.

So what we are doing is that in Saudi, we are covering steel on at least on a quarter or 4 months' basis. So that -- and that's the road map we have adopted for, and that is how we'll continue to work around that. So for 3 to 4 months still, we keep on covering, and thus have kept it open.

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Nirav Shah, [17]

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So broadly, for December, we have covered broadly.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [18]

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Broadly, we are covered till November, December now.

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Nirav Shah, [19]

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This November, December?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [20]

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Yes, please.

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Nirav Shah, [21]

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And we have maintained the $100 per tonne guidance for Saudi operations?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [22]

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Yes, if you look at...

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Nirav Shah, [23]

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Is there should be any upside on that because steel has come down? So are you divesting or you're maintaining as of now?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [24]

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No, no, we'll continue to maintain that at this point of time. $100 margin -- EBITDA margin is the guidance we'd like to keep at this point in time, please.

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Nirav Shah, [25]

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Perfect. And sir, second question is there's no change in the India execution plans for the entire year despite a slower Q1. You'll cover up in the next 3 quarters?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [26]

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We will try. I mean, you see time lost is a time lost. Let's recognize that fact. But the good part is that we have our order book with the government, and we are now -- we are from an operational point of view, we have the capacities, we have the capability, and we have the order. So we are trying to recover as much as possible, what was not possible in Q1.

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Nirav Shah, [27]

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And last question is on the CapEx. We did around INR 78 crores for the current quarter. For this full year, what is the guidance separately? What is the CapEx shall be for the coating capacity at Bhopal?

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Percy Birdy, Welspun Corp Limited - CFO [28]

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So for the coating capacity at Bhopal, we are expecting another about INR 50 crores to INR 60 crores. The entire Bhopal project is about INR 180 crores, as we have disclosed in the past as well. And the sustainable CapEx in India would be in the range of about INR 40 crores to INR 50 crores per annum, which is like a maintenance CapEx.

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Nirav Shah, [29]

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So broadly, our CapEx this year will be INR 80 crores in Q1, INR 60 crores for the full year that cross-estimates CapEx, and another INR 50 crores, INR 60 crores for the coating capacity?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [30]

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No. So the total Bhopal project is about INR 180 crores, out of which, coating is going to come now -- in as we go forward till December. And apart from that, in India, the maintenance CapEx annually is in the range of INR 40 crores to INR 50 crores.

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Nirav Shah, [31]

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So total would be how much, because some part of that coating CapEx would have been incurred in Q1?

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Percy Birdy, Welspun Corp Limited - CFO [32]

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You can say about INR 100 crores. Including the coating, plus the maintenance CapEx in India, it will be in excess of about INR 100 crores.

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Operator [33]

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We have next question from the line of Vikash Singh from PhillipCapital.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [34]

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Sir, my first question is if I look at the order book movement. So on a math calculation, it seems that this has slightly declined and this order's negative -- in the order book addition on a quarter-on-quarter basis by 18 kt. So have we got some order canceled in India, or if you can just reconcile it?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [35]

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No. You're -- you're right. From a quarter-on-quarter basis, the order book in the first quarter has been slightly lower than what has been in the past quarter. There's no doubt about that, Vikash. And -- but that's the nature of the business.

In Q1, the order placement and the order executions, typically -- both of them are typically on the lower side of it. But then if you see, the momentum gets built up over Q2, Q3 and Q4. And if you look at all the historical chart as well, that means for the last 2 or 3 years, it will give you a very clear indication around that. So it's a typical project business scenario. And I don't think so that's -- it causes any concern to us.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [36]

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No, no, sir, actually, what I was talking that last quarter, we ended up with a 756 kt order book. We have executed 72 kt, and that's been 666 kt. So there is -- and then the missing 18 kt in the order book. So I was wondering whether some there's segmental or -- what had happened actually?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [37]

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Vikash, I think so 18,000 tonnes of order book, I think so we can reconcile off-line. In these large numbers, some 15,000 tonnes, 18,000 tonnes can move here and there. But nothing has got canceled, as just what we will tell you nothing has got canceled. And then more importantly, you see a robust demand and robust pipeline for the future orders coming in as well.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [38]

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Okay. And then a similar trend in the U.S., our order book addition has been fairly low in Q1. So any explanation that with why it is in the U.S. also, the additions has been a little bit dull this quarter? Or how it this panning out in this quarter, if you can explain?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [39]

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So Vikash, we are, let's say, on the small diameter mill, on our ERW mill, we are only book in October, November. And you know that small damage on mill bookings happen on a quarter-on-quarter basis. So -- and we have orders -- we have projects in pipeline, and I'm sure that by September -- even by end of August, early September, we should be able to close some more orders to take care of our ERW business.

Having said that, on our large diameter mill, we have order book -- confirmed book till -- almost till mid- to end of February. We are strategically positioning ourselves for some projects there. And so to that extent, we have kept our mill booking open deliberately. So we have to -- we have to strategize that, and we have done that. And I think so the position will help us in future, the way as we move forward.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [40]

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Yes. And sir, just one more clarification on the U.S. in earlier March, you had said that we are expecting the similar kind of profit in the remaining order book, similar kind of profitability in U.S. to be maintained, while we are giving a guidance of $200 plus. So because currently, it has around $330 per tonne. Sir, if you can just explain where we are actually seeing us in terms of U.S. profitability?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [41]

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So as I said, in this quarter, there were certain deliberations. There were certain old orders which also -- the pipes of which also moved out. So there is a little bit of an [EBITDA embedded] into this EBITDA, what we have shown it to you. Having -- but having said that, I think so the order book, what we have at this point of time for the large diameter, and also the order book we see unlikely to have for the small diameter. I think so the blended EBITDA on a conservative basis would still be in excess of $200. That's what we are saying.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [42]

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Okay. Sir, that's a conservative estimate you are talking about?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [43]

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Naturally.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [44]

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And sir, in Saudi, like you said that you have booked till November, December, so we are still open to considering a run rate of 120, 130 kts or we are still open for almost 500 kt worth of scale, that is not back-to-back booked?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [45]

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In Saudi, we are booked for not till November, December. We are booked till at least next 15 to 18 months.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [46]

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No, back-to-back steel booking. I'm talking about, so 500 kts exposed...

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [47]

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Yes, you're right. You're right. From a -- I was commenting, from a pipe order. From a pipe position, on a pipe order book, we have almost booked for 18 months for now. On the steel side of it, we have covered up till November and December. And we still feel that the steel market should remain flat, stable. And that's how we are even forecasting things as well at this point of time.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [48]

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Okay, okay. And sir, just one thing. In terms of your old legacy order, so just the last quarter where you had some portion, and now, you would be having these [good] orders going forward, right?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [49]

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No, we will -- we still have a small portion of the old legacy order remaining, but now that is spread over the next 18 months. So it's not a pain. The maximum pain, which is -- it was supposed to inflict, it has already been inflicted. And now that pain is not even going to be anything noticeable in that.

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Vikash Singh, PhillipCapital (India) Pvt. Ltd., Research Division - VP of Metals & Mining [50]

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So in that case, Saudi EBITDA guidance shouldn't be more than $100 per tonne because next one -- quarter onwards really kt order is very low. We are very much comfortable in terms of steel prices. Even in last 1 quarter the steel prices have gone down?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [51]

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You are -- I mean, I would leave it to your best judgment on this matter, Vikash. And you guys are much more strategically planned than what we are. We are more than happy to assume. But all what we are giving is a very conservative guidance at this point of time. Listings look definitely positive. There's no doubt about it.

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Operator [52]

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(Operator Instructions) We have next question from the line of Sachin Kasera from [Sven Investments].

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Unidentified Analyst, [53]

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Two, three questions I had. One was on this net debt figure of INR 195 crores. You mentioned that you also had certain good advances. So as we go ahead, how will the working capital cycle move? And will this -- that figure go up? Or will it come down for that?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [54]

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So the advances from customers do not come to the debt figures. Those are a part of the working capital. As far as the net debt is concerned, it is at about INR 196 crores at the end of June, and it is only going to move downwards. So sooner than expected because our target was to leave net debt 0 by March 2020, but we will be achieving that goal, hopefully earlier than that.

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Unidentified Analyst, [55]

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Sure. And secondly sir, just clarifying, this mandate of INR 195 crores doesn't include any debt from the Saudi operations. This is only pertaining to India and U.S.?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [56]

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That's right. This is in [debt] . Correct.

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Unidentified Analyst, [57]

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And how much it is in debt of the Saudi balance sheet offer, sir?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [58]

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Saudi, the working capital debt keeps fluctuating in the range of about SAR 350 million to SAR 400 million. So as of March, I recollected was about close to SAR 350 million worth of working capital, which should -- in rupee terms, it will translate close to about INR 650 crores.

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Unidentified Analyst, [59]

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Sure. Secondly, so my question was regarding this net debt and the net cash we have. So we -- as well as on June, we continue to have almost INR 110 crores of cash. And you guided that our CapEx, we see like INR 100 crores to INR 125 crores, INR 130 crores if -- particularly, robust cash flow. So what is the point of keeping such gross debt and cash? And when we are putting that investments into bonds, we are continuously having to mark down in certain corporate bonds and all that. So better [not one sense] or maybe pay some premium and get the debt and the cash at a more respectable level. And that will be a better way to put the entire cash flows.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [60]

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Yes. So you're right. In many ways, we are not investing anything further into bonds or anything. We are trying to liquidate it as early as possible. But as you are aware, the markets are very [illiquid] as of now. So it's a challenge to liquidate it without booking substantial losses also. But the objective is, you're right, we want to utilize the cash to liquidate the gross debt and finally bring the losses also down. And you also are aware that we also have a buyback, which is coming up. So that also, we will be utilizing the cash.

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Unidentified Analyst, [61]

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So sir, can you give us some breakup of this INR 910 crores of cash and equivalent as to how much is into corporate bonds and how much into mutual fund and how much you actually feed? And what is the rating of this, some of the mutual funds of the -- of some of the bonds that you are having?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [62]

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Yes. Sure. Let me try and give this answer to you. So the corporate bonds as on the 30th of June is restricted to INR 21 crores after making all the provisions. That's a corporate bond. And of course, they were all [investor in] AAA, so the rating continues to be AA plus in most of the cases and totally in certain cases. So INR 22 crores of sales cost has gone. Investment as on 30th June. Then we have additional INR 132 crores in PSU bonds. And these are, again, AAA, AA kind of rated bonds. So most of them [as recognition] are -- if we can get the fair value achieved if we liquidate them. But it would be a matter of time that we get the best of the price. Bank bonds is another INR 121 crores, which are again, AA plus, AA minus kind of a bank bond. These are all PSU bonds, none of them with any private bonds. So these are all PSU bonds. So if I add up all the 3 of them, that becomes close to INR 275 crores roughly. Then we have in mutual funds, another INR 190 odd crores in the mutual fund. So together, with the bond and the mutual funds, we are talking about a treasury of almost INR 460 odd crores. And the balance of the money is lying as a cash and bank balance in various geographies, some part in the U.S., some part in India, some part in Saudi here. But within India also, there are a number of different plans. So to that extent, all the necessary provisions have been made, and the liquidation has been made. And to that extent, I think, going forward -- but for certain unforeseen situation, that may happen on the PSU bonds and bank bonds, which is very unlikely. We may not require any further provisioning. Just wanted to confirm also on the fact that going forward, the Board has clearly decided not to invest in any of these bonds for the time being. And to the rational any -- that the company will have will only be in the liquid mutual funds. Thanks, [WCL]. So that policy will continue.

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Unidentified Analyst, [63]

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Excellent, sir. Sir, my next question is regarding these net assets held for sale. Your presentation mentioned that figure at [INR 947 crores]. And I think from -- we're going to receive something like INR 900 crores to INR 1,000 crores. So will we be able to book some losses and adjust against the tax liability in the future as we go in terms of...

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [64]

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So as there are FX held for sale, there is also liabilities for disposal. What we are going to -- and these are actually representing the PCMD division and the 43-megawatt power plant, which we had sold March 30. So the amount that we are going to receive is about INR 850 CR for the PCMD and about INR 67 CR for the 43-megawatt plant. So all that has been already accounted in March 31 and already booked into the P&L.

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Unidentified Analyst, [65]

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Sure, sir. And sir, when do we expect this money to flow in, going by the current status of both the deals? Should we look at Q2 as when we should be able to realize this money? Or should we go into Q3?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [66]

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So the PCMD closure is targeted before 31 December 2019. As far as the 43-megawatt is concerned, the sale is concluding very soon. So maybe in Q2 itself, we should be able to conclude it.

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Unidentified Analyst, [67]

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Sure. And sir, just lastly, you mentioned that even with the internal cash flow, you should be net debt-free by end of Q2 or in Q3. And the near [standard] for coming in [of] it, maybe around INR 400 crores will go into the buyback and with [what] CapEx last couple of years. So if you could give us some sense on how the Board is deliberating in terms of the future cash flows because I think we'll be left with something like INR 800 crores to INR 1,000 crores of net cash when we end this year and maybe [things] like next year also additions. So how is the Board deliberating on that? Is it that we are looking at some growth opportunities or the NDR to retain in terms of dividend and buybacks as we are in full?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [68]

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Sure. So I think as we have said in the past, also, we are very, very cautious on any capital expenditure. So apart from this Bhopal plant, which we have done, that is one major thing, otherwise, the maintenance CapEx is also very tightly controlled. We keep looking at M&A opportunities as and when they come across. And if there are any very attractive opportunities, we would always be open to look at them. But in general, we are also not looking at any large M&A acquisitions which would [set up] the cash. Working capital management also is very tightly controlled. So there was, in India, a little bit of strain in Q1 because of the economic situation that India is going through it. But on the whole, we don't expect any major blips on working capital side as well.

Finally, it leaves us with the cash. So once the PCMD sale concludes in December, and as you correctly said, the buyback outflow also INR 390 crores odd will move out, we will be left with certain amount of surplus cash. So the Board is very, very conscious of this, and they are exploring, evaluating all options on how to deploy this surplus cash, whether we return it to the shareholders by way of this any onetime dividend or buybacks. So the objective would be that any surplus cash, which is not having long-term use for us, we will try and return to the shareholders. And sorry, I forgot, in them -- in between, the debt, of course, is a topmost priority. So the debt is something which we'll be bringing down first before any of these.

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Operator [69]

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(Operator Instructions) We have next question from the line of Rukun Tarachandani from Kotak.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [70]

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Can you talk a bit about India -- or does -- during the first quarter -- I mean the second quarter, as we see, so execution was slow in the first quarter. But have you seen the ordering starting to pick up in the second quarter?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [71]

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What we have seen is the order execution pace picking up in the second quarter. And we are also seeing a lot of rates coming up on the table for discussion during the second quarter, but they are yet to -- a majority of them are yet to get concluded. But yes, from a market perspective, we are seeing a large inflow of rates coming into play. And more importantly, a large portion of execution -- robust execution will start in Q2.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [72]

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And the slide mentioned that on the order book that the profitability associated with these orders is significantly better than recent profitability trends. So if you can give some color on this. Is this because of some assumption on steel prices? Is this only to do with operating leverage? Or is there more to this?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [73]

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It's a combination of both. We have booked some orders in the past. And then we would have gotten benefit to the steel pricing, that is not all about it. The other aspect of that is also -- we are consciously focusing on our operational efficiency and very focused on our cost of convergence and all those stuff. So that has also added up to our profitability. And concurrently, as new -- as we have also have a robust order book, it gives me the ability to be a little more selective, little more choosy in terms of getting into more profitable orders. So a blend of all these 3 actions is actually resulting in better profitability in margins.

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Operator [74]

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So we have next question from the line of [Shakib Kapoor] from [Kapoor Company].

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Unidentified Analyst, [75]

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Sir, firstly, if you could give the idea of how much has been our exposure to the IL&FS and DHFL in the form of bonds and other treasury investment.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [76]

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Yes. So IL&FS, we have exposure at 3 levels. We have INR 40 crores at the parent level, which is IL&FS main company. We have INR 30 crores at IL&FS energy, which is INR 29 crores. And we have INR 47 crores with Jorabat Shillong. So between the 3 of them, it's almost INR 116 crores between the 3 companies. Down in our best judgment, the recovery from the Jorabat Shillong should be the maximum and then from energy and then from the main. So out of INR 117 crores, our best estimate is that we should be able to recover at least 50% of that [in net totality] . So that's one. That's one that we have done.

Then with Reliance Capital and Reliance Home Finance and General Insurance put together, we have around INR 120 odd crores with that -- with the 3 of them, Reliance Capital, Reliance Home Finance and Reliance General Insurance. And again, all 3 of them having been fully provided in the books. The last exposure that we have -- which we have provided is the Dewan Housing, which is INR 35 crores.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [77]

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So INR 116 crores, INR 120 crores and INR 35 crores, and it has been provided to the extent of 100%.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [78]

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That has been provided to the extent of 100% now.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [79]

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Okay. So whatever now we will be receiving, that will be added to the cash balance.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [80]

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That will be added to the cash balance that we had, the company has here.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [81]

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Sir, currently, your -- your release spoke about this legal lynching part also. So sir, do the pipes play a role in that waiver linking or our extra category would be the one that could be more applicable, sir?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [82]

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Waiver linking typically would be large-diameter pipes because there is a significant volume of water they would have to move through. So the maximum potential would be for these large-diameter spiral pipes, LSAW pipes. I mean there could be a small component of DI pipes, but it would be a very, very small component, at least in the waiver linking component. I think we are equal to mostly to what we have seen and what we have been -- what we're looking at is all application.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [83]

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Okay. Not the DI pipe. Some applications would be...

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [84]

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Could be there, very small, but the largest component would be these large-diameter pipes.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [85]

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Sir, to make us understand that when we look at your stand-alone number and the control part in stand-alone, I think with other income of around INR 294 crores. Is it about the sales part that we continued in this quarter? Or what is it that you'll get many pipes forward with consol number? So just explain how the other income shapes up in the different -- in the other income between the stand-alone and the consol.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [86]

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Sure. So in the stand-alone numbers, the current quarter has seen a dividend inflow of coming from our U.S. subsidiary, so that is coming as other income, while in consolidated numbers, that gets eliminated.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [87]

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Okay. How much is the business in the U.S., sir?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [88]

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About INR 240 crore rupees.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [89]

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Did you see the calendar year 2018, December '18?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [90]

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It's our interim dividend that the U.S. subsidiary has declared in this quarter.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [91]

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In this quarter?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [92]

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Correct.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [93]

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Okay. And -- excellent. And then when we take the consol part sir, then how is this -- this figure [terminated] , we have there excessive...

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [94]

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So the dividend, it's an intercompany transaction, so it gets eliminated. It has no impact on the P&L.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [95]

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Okay. And in the cash flow, we will be INR 240 crores in net cash.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [96]

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Exactly. From U.S., it will be outflow. In India, it will be inflow or net of tax of (inaudible).

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [97]

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Still in the cash balance basis?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [98]

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Correct.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [99]

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And sir, looking at your -- this -- I think the employee benefit expenses also sir, what should be the annual fee there that we should [add] to around INR 160 crore?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [100]

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Yes. So I think the current quarter figure is pretty much representative. So I think if you were to annualize that.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [101]

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This should be the trend. And last point, sir, on the crude oil prices that has been beginning very volatile. And now sir, the way things are shaping up geopolitically, even crude oil has now [crumbled] from higher levels and are now trending lower. So sir, how -- our thirst is mainly on crude stabilizing and we taking advantage of the evacuation of the shale gas from the basin, which is -- which was mentioned. So what is your (inaudible) includes stabilizing around $50 band? Sub $50 also. Do you think the same traction, the same guidance which you are giving there stands whole also -- then also, sir?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [102]

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See, crude, if you look at it, crude has been volatile. You are right. But it has been moving in the range of, let's say, between $55 to $65. So I think -- so as we have mentioned earlier also, anything as long as it is more than $30, $35 a barrel, more than that, we have always had the CapEx cycle in place. So even if it is hovering around $55 to $65, the CapEx cycle is pulling it in. That's one part of it.

The second part of it is the drilling in the Permian Basin is going unabated. America is -- U.S. at this point of time is almost producing 11 million barrels, right? And they continue to -- they are continuing that building and maintaining that particular position. So with respect to the approval by that, whether it is $55 or $65 there, the drilling goes unabated. As long as their drilling goes unabated, the evacuation of the crude and the [resultant] pipelines for that will be in place. And as what they are drilling, there is an associated gas which is coming out, and that is what is leading to the growth in the gas transmission industry. So we are not see -- while the crude may be fluctuating here and there, but we are not seeing any slowdown on the drilling side and the evacuation side of it.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [103]

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Okay. And sir, you spoke about a faster pace of execution, and in the business update, it is mentioned that you are confident of operational -- improved operational performance on Q2 level. So what are you trying to explain here in terms of how the new business cycle is in volume terms? What is our deliverables schedule for this -- from Q2 onwards, sir?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [104]

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We have an order book at the opening of Q1 as well, but we were constrained because of the financial uncertainty prevailing in the domestic Indian market. We were slightly constrained in terms of -- or we were deliberately -- we have deliberately slowed down the execution phase of it. Now as the financial cycle and the financial stabilities have started coming back into play, we will go full throttle in terms of our execution. And that is where you would see a significant [quantity] of performance improvement which will happen, and the quantities will build up.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [105]

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No, sir. For India, it seems because we are major clients to the EPC players only. And that is -- and at the back end, it is the government that is taking the delivery of those. Am I correct in the assessment? Or -- who are our major clients for domestic operations?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [106]

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We have both. We have direct leaders, the PSUs in the oil and gas sector; and we have also the EPC players, which is in the water sector. Both.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [107]

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But end consumer is the government of India only, sir. As you told us, there was no clarity.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [108]

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That's true.

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [109]

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That's true, sir. So then, sir, why was the execution phase slower, sir? When you know the [genuity] and the sovereignty being the government, it was only the funds not being released. That was the reason why we were being slow on it?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [110]

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See, you have to see -- at the end, you have to see who is the contractual entity. For me, in the oil and gas sector, it is the PSUs which are the contractual entity, right? In the case of water segment, it is the EPCs which are the contractual entities. We are here to respect the contractual entity. The end user may be the same, right? So because of the uncertainty in the cash rent which was there on flow, which was not in place, primarily in the water sector, where we have to deal with a contractual entity like an EPC supplier, that is where we have -- the operational performance has slowed. But really, it was a governmental entity which was the PSU. Everything will contract, right?

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [111]

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Right, sir. Last one was on net debt...

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Operator [112]

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Sorry...

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Rukun R. Tarachandani, Kotak Mahindra Asset Management Company Limited - Investment Professional [113]

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Okay. Yes. I'll come in the queue. I'll come in the queue.

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Operator [114]

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So we have next question from the line of [Bhoran Jhawan] from [Systematix Shares & Stocks].

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Unidentified Analyst, [115]

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My question is regarding the sale of PCMD division. So what is the current status of that, like, what are the pending regulatory approvals? And then the money which has been realized in -- we thought the money would be coming in December quarter.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [116]

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As you know, we have signed a BTA, a business transfer agreement. As per the business transfer agreement, the deal is to be consummated by end of December. And we still feel it seems to be on track. And that's what -- all what we have at this point of time. I don't think there's any major movements which have happened or any matter of grave concerns attached with that. Still seems to be absolutely on track the way they have been highlighted earlier.

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Unidentified Analyst, [117]

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Okay. And the money has been realized also or not?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [118]

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I'm sorry?

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Unidentified Analyst, [119]

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The INR 900 crore rupees, that's already been...

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [120]

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That will only happen once the deal gets consummated. And I think -- so that -- that's what we are saying. Contractually, it is up to end of December 2019.

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Operator [121]

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So we have next question from the line of [Sachin Kasera] from [Sven Investment].

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Unidentified Analyst, [122]

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Yes. So you have mentioned that going forward, this quarter, the slowdown in India was mainly on the water side, and that should now pick up from Q2. Already seen the improvement in July. So in that case, with the mix changing little bit more towards the water, what is the type of EBITDA per tonne we are looking at India operations? Will it correct from what we have seen in Q1, which was primarily driven by oil and gas?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [123]

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As our guidance for the blended EBITDA of our India operations has been around $60 to $70 per tonne, and we continue to maintain that.

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Unidentified Analyst, [124]

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Sure. Sir, secondly, you mentioned certain onetime benefits in the U.S. numbers. Will you be able to give some color on that? Like it was, what, a $10 million onetime benefit we got from lower cost?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [125]

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No. No. It was not because of the lower cost. It was because of some inventories of our previous orders, which were sitting with us. And based -- and they've got liquidated and they've got dispensed, so there was a component which got added up into this EBITDA number. But these were one-off things and which has happened. I don't think that we will see something like that in the subsequent quarter. In subsequent quarters, will be pure operational performance of the existing quarters in hand.

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Unidentified Analyst, [126]

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Sure. And sir, lastly, this -- what is the outlook on the ERW? Because they are the -- order booking is quite low, both India as well as in U.S. So can you give some sense on how things are looking on the ERW front?

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [127]

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On the U.S. side of it, our ERW, as I mentioned earlier in this call, our ERW booking is, let's say, till end of October. And -- but that's the nature of the business. Typically, ERW booking is for 2 or 3 months in advance. And as we -- so as we get into by end of August, early September, we would definitely have to get some more orders. There seems to be fair amounts of visibility of projects on which we have participated, and they are under active consideration. I think so that we could be able to secure some quantities, which will take us to the quarter 4.

As regards India, in India, we have an order book of almost close to something like 31,000 tonnes in our ERW business. We are seeing resurgence of this city gas distribution. We are active. We are one of the key players. We are actively working with most of the people, those who are -- want to put in those -- in CVD. And I think so -- and also we are seeing a few projects coming up from our PSU segments as well, where they are putting some pipeline. So the CWC segment as well as the business coming up with PSUs, giving us a lot of visibility to us that we would only -- we should be able to top up this quantity in some times to come.

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Unidentified Analyst, [128]

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Sure. And just one data question on the interest and finance charges of [INR 3,500 crores]. What would be the breakup between the financing of the interest-bearing charges and some of the other bank charges and LCs on that?

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Percy Birdy, Welspun Corp Limited - CFO [129]

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See, the finance charges for this current quarter, we are basically having 2 items which we would like to highlight. First one is an impact of NRS 116. So as you are aware, that's the new accounting standard that has become applicable from this quarter onwards for all the companies. And essentially, the impact that it does is it reduces the lease rental expense which used to go above the EBITDA line. And a corresponding, almost matching impact goes to depreciation and interest. So in the current quarter, we are seeing an impact of a little more than INR 1 crore which has gone into finance charges. So that is one aspect in the finance charge cost.

The second aspect is also we had made certain prepayments of loans for which there is an extra cost that is involved. So that also is adding up about another INR 1 crore, INR 1.5 crores. So you are seeing about INR 2.5 crores of, you can say, an exceptional nature item, which has come in finance charges in the current quarter. Apart from this, there are -- normal bank charges are relating to bank guarantees. So typically, when there are oil and gas orders in India, you also need to provide bank guarantees as per the contract terms. So these bank charges are also coming up in Q1.

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Unidentified Analyst, [130]

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Yes. I understand, sir. My question was from the context that once you become debt-free, the charges on the interest-bearing loans will go away. So -- but I believe we'll send it to income charges towards LC and all that. So what is the type of number we are looking at there that will get us a better understanding?

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Percy Birdy, Welspun Corp Limited - CFO [131]

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So once we become net debt-free, the interest cost will not still go away because we are talking about net debt-free right now. Gross debt is likely to be there for some more time because there are certain long-term loans. So in India also we have nonconvertible debentures, which are subscribed by long-term investors, large institutions. And they may not be willing to allow us prepayments, though we are talking with them. Same in U.S. also we have a long-term loan. So while we are trying to prepay parts of it in tranches, but they are also -- there's a cost involved when we try to prepay it. So the point I'm making is that the finance charge will not become 0 even after we become net debt-free.

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Unidentified Analyst, [132]

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But can you just quantify what is the quantum of LC which has been debt-free? That will be helpful.

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Percy Birdy, Welspun Corp Limited - CFO [133]

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Yes. So you can say, approximately, out of the INR 39 crores that you are seeing in the current quarter, roughly about 15 -- INR 10 crores to INR 15 crores would be towards bank charges, a little less than that. Less than INR 10 crores would be for bank charges, and the remaining would be all finance charges.

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Operator [134]

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Thank you, sir. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Sir, over to you.

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Vipul Mathur, Welspun Corp Limited - MD, CEO, BR Head & Director [135]

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So thank you, everyone, for participating on our Q1 conference call. We will be glad to answer any further questions on a one-to-one basis if any of you have any queries, please. Thank you.

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Operator [136]

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Thank you very much, sir. Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.