Pipe maker Welspun Corp today reported a steep 84 per cent decline in consolidated net profit to Rs 23.1 crore for the quarter ended March 31, due to turmoil in energy markets in second half of the last fiscal.
Part of the USD 3 billion Welspun group, it had clocked net profit of Rs 143.8 crore in the year-ago period.
The firm said in a BSE filing that its total consolidated income fell by 21 per cent to Rs 1,840.9 crore in January- March quarter of 2015-16, from Rs 2,331.4 crore during the same quarter of the 2014-15 fiscal.
Welspun Group Chairman B K Goenka said: "Latter half of 2015-16 witnessed significant turmoil in energy markets adversely affecting near-term outlook for line pipes and also margin profile of our orderbook."
Last fiscal results have been very satisfactory given the market place challenges and the firm achieved pipe sales and production volumes of over a million tonnes (MT) for fourth consecutive year, he added.
The firm's pipe production fell to 279 kilo tonnes (KT) in the March quarter of last fiscal against 294 KT in the year- ago period, while sales also declined to 270 KT from 292 KT during the same period.
For entire 2015-16, Welspun Corp Ltd's (WCL) consolidated net profit rose to Rs 227.47 crore, as against Rs 69.04 crore in 2014-15. Total income was, however lower at Rs 8,320.44 crore from Rs 8,450.49 crore.
Total pipe production in 2015-16 was lower at 1.12 MT as against 1.13 MT in 2014-15. Sales, too were lower at 1.10 MT from 1.15 MT during the same period.
On outlook, Goenka said: "Emerging trends in the energy market is opening up interesting possibilities and we continue to explore new opportunities across the global markets."
The current pipe order book position stands at 913 KT (Rs 5,100 crore). Large orders booked during Q4 2015-16 include 200 KT for a project in MENA region, the firm said.
WCL's cash and cash equivalents stood at Rs 1,470 crore at the end of March 2016 against Rs 1,111.1 crore a year ago.
Its net debt was higher at Rs 2,024.3 crore on March 2016, up from Rs 1,909.5 crore as on March 2015.
The company said its Board has recommended a dividend at Rs 0.50 per share on 265,226,109 shares.
On business outlook, it said volatility in energy prices, reduced access to capital markets and consolidation in oil and gas sector has been causing delays in project schedules.
This coupled with volatility in steel prices and higher competitive intensity has made the business environment more challenging, WCL added.
"However, opening up of new markets and strong domestic linepipe demand provides a near term upside. Despite challenges, we remain positive on long-term demand outlook. Outlook for Plate and Coil Mill operations looks positive for the year ahead," it said.
The company's stock price plunged 11.52 per cent to close at Rs 87.90 apiece on the BSE.
