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Kolkata: Speciality steels and wire rope maker Usha Martin has bounced back into the black in the first quarter of the current financial year with a standalone net profit of Rs 19 crore against a loss of Rs 98 crore in the year-ago period, driven by improved realisations and strong domestic demand.
The turnaround came even as the Kolkata-based company continued to hold discussions on sale of its steel business with potential buyers such as Tata Steel, JSW Steel, Liberty House and Kalyani Steels to pare its Rs 3,700-crore debt.
Standalone revenue increased to Rs 1,219.86 crore in the quarter to June, up 30.3% from Rs 936 crore a year ago, while total EBITDA shot up 120.8% and 94.1% year-on-year on standalone and consolidated basis respectively.
“Our performance in wire ropes and in steel during the quarter was better than last year mainly due to better realisation and strong market demand.
Barring oil and gas sector, the domestic market is also seeing good traction for wire ropes, particularly from mining and infrastructure,” Usha Martin CFO Rohit Nanda said.
He said that although the company saw cost pressure building up during the quarter, as input prices went up, it was able to pass on the price hike due to buoyant demand.
While the company’s wire ropes business improved significantly during 2017-18 from the previous year, a revival in its steel business has helped boost margins in recent quarters.
Sale of wire ropes went up 13% during the quarter to 15,162 tonnes, from 13,376 tonnes a year ago.
Exports totalled 7,345 tonnes, up from 5,513 tonnes in the year-ago period, with a 48.4% share of output.
However, domestic wire rope sales were marginally lower at 7,817 tonnes, from 7,863 tonnes.
Both wire ropes and speciality steels, barring large diameter ropes used in oil sector, have been seeing capacity utilisation levels of 80-90%, according to the company, and the trend is expected to continue.
The company makes speciality wires and wire ropes used in elevators, mining, and oil and gas sectors, and has a one million tonne steel plant that makes speciality steels.
However, the company’s performance in the ongoing July-September quarter is likely to be muted mainly on account of the monsoon, which traditionally affects steel demand.
Therefore, it is planning a regular maintenance shutdown of its blast furnace during this period.
The company hopes its performance will pick up in the third and fourth quarters of this fiscal and help maintain a steady growth momentum.
Nanda said there is “good interest” in the steel business from potential buyers who are conducting “due diligence” and the process is on regarding potential sale of the business.
However, he declined to comment on a time frame within which the company hopes to conclude the deliberations.
