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Welspun Guj: Strengthening order position

(The Hindu Business Line 25th March 2008)The recent order bagged by Welspun Gujarat for supply of spiral pipes worth Rs 1,075 crore in Northern Africa reiterates confidence in the company’s growth prospects. This order, which was bagged against competition from players in Europe, will take Welspun’s order book position to over Rs 5,900 crore.
Strengthening presence in exports
Welspun has always enjoyed a higher contribution from the export market, owing to its long-standing relationship with some of the global oil and gas majors. Notably, Welspun derives more than 90 per cent of its revenues from exports. The order also brings to focus Welspun’s expanding presence in the global markets.
While markets such as the US and West Asia have so far been Welspun’s forte, this move towards a relatively newer market in Algeria holds promise. Greater geographic diversification may also help Welspun weather the impact of any likely slowdown in the US more effectively.
Welspun may also benefit by way of higher operational freedom given the longer time frame in execution; it has the option of executing the order within a period of 17 months. This is likely to help Welspun plan its production schedule more effectively. The stock price however, dipped by over 7 per cent during the day.
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