Mumbai: Steel pipemaker Welspun Gujarat Stahl Rohren’s April-June profit nearly doubled on volume growth and a one-time gain on account of foreign exchange fluctuation, a senior official said on Thursday.
The company posted a net profit of Rs1.38 billion in the April-June quarter on a 72% rise in net sales of Rs18.8 billion. It earned Rs375.3 million on reversal of foreign exchange provision and coil sales.
“It’s mainly because of larger volumes,” director Akhil Jindal told the agency over the telephone. “We saw an almost 50% growth in pipe volumes while plate volume is three times of last year.”
“We did not have to do forex provisioning either, which happened in every quarter of last year,” he added.
Demand for pipes was higher in the April-June quarter as optimism of an economic turnaround prompted the oil & gas transporters to push through their orders.
Welspun added orders worth Rs12 billion in April-June, taking its current order book to Rs68.4 billion.
Expectations of higher demand to transport gas after Reliance Industries started production from the Krishna Godavari basin and the government’s thrust to expand the nation’s oil & gas network prompted Welspun to expand capacity, Jindal said.
Its board approved setting up a 0.3 million tonne pipe mill in south east India and plans to move another mill with a similar capacity into a non-special economic zone at Anjar, Gujarat, it said in a statement.
It will invest Rs5.5 billion in the two pipe projects, which will be commissioned in 12-15 months, it added.
The investment has been planned “looking at the growth potential within India and to reduce logistics cost by being in close proximity to customers,” the release said.
India’s natural gas output is expected to nearly double by the end of the year when Reliance Industries, which started production from its giant deep-sea field on the east coast, reaches its full capacity.
“Lot of pipe demand is coming from south east India. So, it is a strategic growth for us. There is tremendous gas transport opportunities now,” Jindal said.
Shares in the firm ended down 3.3% at Rs197.35 in a flat Mumbai market.