INDUSTRY ANALYSIS-METAL PIPES CASTING AN FORGINGS

Steel pipes and tubes industry is one of the important segments of the Indian Steel sector, it
contributes around 8 % of the India’s steel consumption. The steel pipes and tubes industry are
classified into two segments – Electric Resistant Welded (ERW) and Submerged Arc Welded and
Seamless (S&S). The Rs. 50,000 crore steel pipes and tubes industry are split equally between the ERW
and S&S segments in value terms. In volume terms, the domestic market is split 70:30 between the
two segments.

By volume, the India Steel Pipes and Steel Tubes Market size was estimated at 6.98 million
tons in 2023. During the forecast period between 2024 and 2030, the India Steel Pipes and
Steel Tubes Market size is expected to reach the volume of 7.66 million tons by 2030.

The Petroleum and Natural Gas Regulatory Board (PNGRB), in collaboration with City Gas
Distribution entities, has launched a campaign (26th January 26th to 31st March 2024) to
encourage the widespread adoption of PNG in households and expand the consumer base
across various segments of the population. Water transportation for irrigation projects
through line pipes is likely to grow steadily with continuous focus by the central and state
governments. Export market remains a focus area as outlook remains strong in Middle East,
Australia, Southeast Asia etc. WCL have been booking orders in these geographies. India
order book remains strong at 369 KMT.

In the interim budget, Jal Jeevan Mission got the highest share (INR 69,926 crore within the
total budgetary allocation (INR 77,390 crore) to the Department of Drinking Water and
Sanitation. DI Pipes segment will remain as one of the key focus areas for Welspun Corp.
Our brownfield expansion (100 KMTPA) at Anjar has been progressing well. With strong
growth potential in the MENA region, WCL has announced setting up of 150 KMTPA DI
Pipe facility in the Middle East with an investment of approx. INR 500 crore and expected to
be operational by H1CY2025. Our strong order book position within a short period of
starting commercial production is a testimony of our capability and credibility.

Porter Five Force Analysis:

Threat of substitute is very low-. D.I. Pipes are already operating at over utilizations level
along with major application in water and sewage segments only. This overcapacity is
added benefit for SAW companies as overflow of orders from D.I Pipe will come into SAW
Pipe manufacturers. Apart from that, PVC Pipes have already extended its arm wherever it
had to and now have only few opportunities to take market of steel pipes, indicating low
threat of substitute in future.

There is very high entry barrier-. Stable market share across years is important point
indicating the possibility of high entry barriers. Along with that, a smaller number of
competitors, High Requirement of Capital, Long Pay Back Periods, High expertise to start
plant, Requirement of Certifications and advantage in Economies of Scale are all the points
which collectively discourages new entrants to start new plant at ease.

Prices of commodity here are market determined. --Hence, our raw materials are basically
acquired on basis of market determined prices. Our buyers have some pricing power to ask
for. There exists higher bargains for basic whereas VAP and buyers with critical applications
have very less bargain power. System of tender brings more bargain power to buyer when
compared to custom order system where margins depend on clients and products and are
usually higher. Hence, here, the bargaining power of supplier is limited and for buyer and it
depends on companies to companies and products to products.

Competition is again very limited. With few players in the market, and also with low-
capacity utilizations, additional intense competition means even less profitability. Hence,
competition exists among players, but companies indicate that they will not sell below
certain levels of profit. Hence, competition exists for basic commodity product with limited
aggression. But for VAP and order to make products, the competition is almost not there.

The porter analysis seems to be very favourable tilting towards industry’s continued
profitability.