Usha Martin Limited to ramp up capacities: Rajeev Jhawar Usha Martin confirms growth in international business
Previous year proved to be most
challenging in living memory as COVID-19 brought economies and businesses to a
grinding halt. India was hit hard by the pandemic. Usha Martin Limited expects
the Indian economy to rebound on the back of pent-up demand across sectors. Rajeev
Jhawar, Managing Director of Usha Martin Limited hopes that Reserve
Bank of India’s (RBI) monetary stimulus and the Government of India’s fiscal
measures will bring the economy back to a sustainable positive territory. He
believes that the substantial budgetary outlay on infrastructure by Government
of India will augur well for their business.
Rajeev Jhawar expects that the
domestic demand for their products, particularly in the construction and auto
sectors will start picking up after the monsoon season. “The various measures
announced by the Central government to boost the economy are likely to start
yielding results post-monsoon”, Rajeev Jhawar said. There should be a pick-up
in demand during the festival season post-September-October, by which time the
company hope that the Covid situation would also be brought slightly under
control. He also forecasts his views on the various stimulus measures taken by
the government to enhance the growth of the economy.
While the demand for wire rope has
been fairly decent in international markets, the domestic demand across various
sectors has been very low due to the lockdown in the wake of the Covid-19
pandemic, Rajeev Jhawar said. The reverse migration of labourers had affected
industries such as construction, particularly in the western and northern
regions of the country. This impacted the demand for wire rope.
UML’s wire rope business manufactures
wire, strands, LRPC and wire ropes, which cater to various industries,
including steel, infrastructure, construction and auto. “The demand from
construction, auto and oil sectors is down. Our plant is currently operating at
50-55 per cent of the installed capacity. The export demand is, however, good
and the rupee depreciation is supporting us,” Rajeev Jhawar said. The company
is hopeful of ramping up capacities by the second half of this fiscal once the
Covid situation is brought under control and the domestic demand starts picking
up.
Usha Martin Limited also expects to
gain momentum in their international business as most countries where they are
present have returned to near normalcy. Talking about exports, Rajeev Jhawar Usha
Martin said the demand for wire rope has been ‘fairly decent’, if not
strong, from markets such as Europe, the US, South America, Australia and
South-East Asia. Exports account for close to 40 per cent of the company’s
consolidated turnover, which stood at around ₹2,154 crore for the year ended
March 31, 2020.
Global demand for the oil and
offshore market saw improvement during the FY20-21 which in turn boosted the
demand for speciality rope products of the company catering to the said sector.
According to Rajeev Jhawar, it is expected that the demand from the said sector
shall sustain in the next fiscal and is expected to provide business
opportunities to the company. Further Rajeev Jhawar also states that with
steady infrastructure spending by the government, speciality products used in
construction and infrastructural sector may be growth drivers for the company
in the years to come.
Usha Martin, which sold its
one-million-tonne integrated steel plant at Jamshedpur to Tata Steel for
₹4,200-4,600 crore, completed the first full year of operations of its wire
rope business in FY20. Through the strategic move of selling UML’s steel
division to Tata Steel, Rajeev Jhawar helped the company in enabling them to
significantly de-leverage their balance sheet and free up critical cash pool,
which they could invest in their profitable and sustainable wire rope business.
The result of such divestment resulted in enhanced fiscal stability and allowed
Usha Martin to focus primarily on their core business.
Usha Martin Limited has a
manufacturing capacity of around 2,30,000 tonnes per annum across its two
facilities in India — at Ranchi, Jharkhand and Hoshiarpur, Punjab and three
overseas units in the UK, Thailand and Dubai. The company recorded a
consolidated revenue of Rs. 2,097.28 crore, compared to Rs. 2,153.82 crore in
FY19-20. UML’s consolidated EBITDA stood at Rs. 312.56 crore in FY20-21 compared
to Rs. 284.96 crore in the previous year. Despite the shrinkage in revenue,
there was a marked improvement in the EBITDA margin from 13.23% to 14.90%.
During the year, Usha Martin Limited had adequate working capital and
liquidity, which ensured that their operations went on smoothly.
Enrichment of product mix will
continue to be a key value driver for Usha Martin Limited, by gradually
reducing dependence on low-contributory items and increasing focus on
value-added products. According to Rajeev Jhawar, the company will take
concerted effort on maintaining fiscal solidity with focused capital
expenditure. Usha Martin is planning to continue to place greater emphasis on
implementing digitalisation across the organisation.
Rajeev Jhawar, the
son of Brij Jhawar, is the managing director of Usha Martin Limited. |
Usha Martin Limited with the leadership
of Rajeev Jhawar, continues to follow stringent safety protocols to ensure
wellbeing of its employees and is in continuous process of dynamically adopting
to the ever changing global and domestic macro-economic environment as and when
the same is required in these post – pandemic times.
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