Welspun Enterprises acquires 50.10% stake in Michigan Engineers

 

Strategic investment enables Welspun Enterprises’ expansion into the promising water and tunnelling solutions segment in India  

Chennai, 22nd August 2023: Welspun Enterprises Limited (WEL), the infrastructure development arm of Welspun World has announced the successful acquisition of 50.10% stake in Michigan Engineers Private Limited (MEPL), a trenchless technology-based EPC company in the urban water infrastructure segment, from the existing shareholders for an equity investment of Rs. 137.07 crore. With the completion of the transaction, MEPL is now a subsidiary of WEL.

The acquisition aligns with WEL’s strategy to expand the water infrastructure business and marks the Company’s entry into a high margin and high growth water and tunnelling solutions segment, further strengthening its overall business portfolio.

Leveraging the sophisticated infrastructure development techniques deployed by MEPL, the strategic investment will enable WEL to enter the urban infrastructure space and provide water and tunnelling solutions, which complements its existing water and road businesses. MEPL’s experience and capabilities will now allow WEL to undertake projects in the niche and promising areas of micro tunnelling, segment tunnelling, sewer network rehabilitation and other trenchless technologies across India, leading to diversification of its project portfolio and service offerings.

Over the last few years, WEL has already established itself in the water and wastewater segment in India and has built a formidable order book of over Rs. 6,000 crore for the segment. The Company is currently executing a few prestigious projects including the Rural Water Supply Project under Government of India’s Jal Jeevan Mission in Uttar Pradesh covering 2,500 villages and the 418 MLD Waste Water Treatment Facility (WwTF) project at Dharavi, Mumbai. The Dharavi WwTF will be India’s first multi-tier wastewater treatment facility, with state-of-the-art technology and low footprint. Embracing digitalization and automation in its processes, the Company has deployed advanced technologies such as 5D BIM at the Dharavi Project for better project and cost control.

Commenting on the development of the acquisition, Mr. Sandeep Garg, Managing Director, Welspun Enterprises Limited, said, “MEPL is strong, strategic fit for accelerating the growth of our water business and we are certain that the combined strengths of the two companies will drive significant value for both our shareholders and customers. Our proven project management expertise, national presence, strong industry foothold and robust financial health, coupled with MEPL’s technical knowhow, operational and execution capabilities and experienced manpower will deliver a sustained competitive advantage in the water and tunnelling solutions segment. Supported by favourable sectoral tailwinds, the transaction will enable us to further scale up operations and create a unique edge in the industry.”

Expressing his views on the acquisition, Mr. Saurin Patel, Managing Director, Michigan Engineers Private Limited, said, “We are delighted to be a part of Welspun World, known globally for its operational excellence and customer service. Our strategic partnership with Welspun Enterprises is a unique convergence of a financially strong infrastructure developer and a niche EPC player in the water and tunnelling space. We see tremendous synergies between us and are eager to deploy their project management skills and best practices, which will transform our business and further drive growth and profitability.”

Favorable sector tailwinds through government’s thrust on initiatives such as Atal Mission for Rejuvenation and Urban Transformation, National Mission for Clean Ganga, Jal Jeevan Mission and Community Drinking Water Schemes imbibes confidence and shall contribute to the growth of the water and wastewater market.

About Michigan Engineers Private Limited:

With over four decades of experience in underground infrastructure, water infrastructure and sewage infrastructure projects, MEPL is one of the leading players and a preferred partner in the niche segment of trenchless technology in India. The Company has executed a number of marquee projects and is the first Indian contractor to lay up to 500 mm diameter HDPE sewer lines in Mumbai, in addition to being the first company to use slurry micro tunnelling in the country. The Company is vertically integrated and has in-house fabrication engineering, capabilities for manufacturing of micro-tunnel boring machines, CIPP lining and GRP manufacturing.

The Company is spearheaded by Mr. Saurin Patel, who has been the Managing Director of the Company since 1997. He has been instrumental in steering the company’s transition from a pure civil engineering company to undertaking specialized engineering projects of trenchless and rehabilitation technologies. He possesses more than 25 years of experience in the field of Civil Engineering and executing projects in India, with extensive experience in tunnelling and pipeline rehabilitation projects.

MEPL and its existing management team will continue to be led by Mr. Saurin Patel. The combined strengths of WEL and MEPL will be leveraged to create significant value for all stakeholders of MEPL. MEPL’s other shareholders include Mr. Saurin Patel, Authum Investments, Sansaar Housing, Patel Engineering. Except Mr. Saurin Patel and WEL, all other shareholders are financial investors who believe in the platform’s growth potential.

MEPL’s FY23 revenue stands at around Rs. 319 crore, with an EBITDA margin of ~21.5%. The company has been clocking an average EBITDA margin of 19%+ for the last five years on a sustainable basis. Further, the Company’s new order book addition grew fivefold in last five years, with an addition of around Rs. 1,475 crore in FY23, taking the unexecuted order book to around Rs. 1,932 crore as on March 31, 2023. This provides visibility and certainty over next ~3 years. MEPL continues to explore for newer opportunities and deliver execution excellence.

About Welspun Enterprises Limited:

Welspun Enterprises Ltd. (WEL), part of the Welspun World, is an infrastructure development company focusing on Road, Water and Wastewater segments. The Company also has investments in Oil & Gas Exploration. Backed by experienced management and strong parentage, WEL has a proven track record with the execution of water supply projects and over 1,000 kms of road projects. https://www.welspunenterprises.com/