Sources further said talks were on for some time now between Reliance Industries and Welspun Gujarat and both the parties have come to an agreement.
MUMBAI: Metal pipes manufacturer Welspun Gujarat Stahl Rohren Ltd (WGSRL), the flagship company of the $1 billion Welspun Group, may dilute its stake and it is learnt from sources that Reliance Industries is picking up stake in the company.
Sources further said talks were on for some time now between Reliance Industries and Welspun Gujarat and both the parties have come to an agreement.
Industry experts believe Reliance Industries wanted to have control in one of the steel pipe-making companies due to its larger interest in oil and gas where pipe companies have a larger role to play.
Moreover, the current global boom in oil and gas and spurt of investments in oil companies have sent pipeline demand skyrocketing across the world.
Reliance Industries has made two new natural gas discoveries in its east coast blocks in the Krishna-Godavari and Mahanadi basins; in this contenxt, acquiring a stake in Welspun Gujarat Stahl Rohren at this stage makes sense.
When contacted, a Welspun official said: “Reliance may be buying our stocks from the secondary market as the promoters are not selling any stake as of now.” On the other hand, Reliance Industries official refused to make any comments.
The Welspun Gujarat stock closed at Rs 102.80 compared with the previous day’s close at Rs 96.90, a gain of Rs 5.90. It has touched an intraday high of Rs 104.55 and an intraday low of Rs 97.
Last week, there was a block deal of 31 lakh Welspun Gujarat Shares (2.3% equity) on the BSE at Rs 99 per share. In December, ABN Amro picked up 0.67% stake by acquiring 9 lakh equity shares of Welspun at a price of Rs 93 each.
Meanwhile, Welspun Gujarat Stahl Rohren earmarked an investment of Rs 1,300 crore funded through a mix of equity, overseas and domestic debt to set up a captive steel plant and plate mill. Its manufacturing facilities are located near Dahej in Gujarat.
Analysts believe that Welspun Gujarat has managed to gain a strong foothold in US, the most stringent market, which speaks volumes about its quality standards and cost competitiveness. WGSL has achieved newer brand acceptance heights by becoming preferred suppliers to some of the top oil & gas companies in the world.
In the global markets, Welspun Gujarat supplied pipes to oil and gas majors such as British Gas, Exxon Mobil, Shell and Saudi Aramco and in domestic front, it supplies to Gail, IOCL, ONGC and BPCL.
According to the industry estimates, the global capacity for producing SAW (Submerged Arc Welding) pipes is 20,000 km, and India plays a significant role with 25% market share. Based on plans announced by major oil and gas majors, the global demand for SAW pipes is expected to grow to 1,00,000- 1,20,000 km over the next 5-7 years. In Janaury, WGSRL announced order wins from three clients worth Rs 1.1 billion ($235 million), taking its order book to Rs 28 billion. This includes an order for HSAW pipes worth Rs 6.5bn ($144m) for the US markets.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}