GLOBAL ECONOMY
Globally inflation, macroeconomic volatility and geopolitical conflict
continue to be areas of concern. Various efforts continue to be made to cushion the
combined effects of the covid19 pandemic and war-induced rising food and energy prices and
to steer new capital investment in ways that reduce dependencies on countries now deemed
to be less friendly. Global inflation has been pushed higher by demand pressures,
including those from the lagged effects of earlier policy support, and supply shocks,
including disruptions to both global supply chains and availability of key commodities.
Global growth is forecast to slow down. Tighter financing conditions, weaker growth, and
elevated debt levels create significant fiscal challenges for emerging markets and
developing economies.
INDUSTRY OVERVIEW AND BUSINESS OVERVIEW
India is expected to be the fastest-growing economy among the seven
largest emerging markets and developing economies, despite a challenging external
environment. A combination of a stable political environment and significant government
investments in infrastructure is fostering a positive environment for growth in India.
Though India bounced back strongly from the coronavirus pandemic, the country is grappling
with the same headwinds buffeting the global economy. However, Indias economy is
relatively insulated from global spill-overs compared to other emerging markets. This is
partly because India has a large domestic market and is relatively less exposed to
international trade flows.
During the year under review the steel industry was negatively affected
due to disruption of supply-chain, increase of key input materials, global liquidity
crunch due to increase in rates of interest by central banks of major economies including
that of India. Upward spiralling of freight costs had a negative impact on steel
exporters. The Indian economy however showed remarkable resilience through these tough
times due to its strong fundamentals. Development in sectors like oil & gas, port and
mining have resulted in demand for the Companys specialised products such as large
diameter ropes, port crane ropes and mining ropes.
With the expectation of firming up of spendings by government in
infrastructure projects like roads, railways, water and sanitation along with expected
revival in auto sector, demand for steel and steel products will get a boost during the
next fiscal.
PERFORMANCE REVIEW
On a standalone basis, during FY 2022-23, the Company achieved gross
production of Wire Ropes and Conveyor Cord of 67,557 MT against 62,145 MT in FY 2021 - 22.
The gross production of Strand, Wire & LRPC was 91,853 MT in FY 2022-23 against 93,450
MT in FY 2021-22. Production of the total value added products was higher by about 2.5% in
FY 2022-23 compared to that in the previous financial year.
PRODUCTION VOLUME VA PRODUCTS–STANDALONE
Qty in MT |
FY 2022-23 |
FY 2021-22 |
| Wire Ropes |
64,428 |
59,802 |
| Wire/ Strands/LRPC |
91,853 |
93,450 |
| Conveyor Cord |
3,129 |
2,343 |
During the year, consolidated turnover of the Company stood at Rs.
3,267.76 Crore which is 21.57% higher than Rs. 2,688.07 Crore in the previous year. On
standalone basis, the Companys turnover increased by 12.80% to Rs. 2,041.71
Crore in the current Financial Year from Rs. 1,810.05 Crore in Statutory
Reports the previous year.
The EBITDA achieved by the Company on consolidated basis was Rs. 541.39
Crore being 16.57% of the reported turnover, and on standalone basis at Rs. 328.70 Crore,
being 16.10% of the reported turnover against Rs. 418.91 Crore and Rs. 284.82 Crore
(excludes exceptional item of Rs. 31.18 Crore) respectively in previous year.
Financial Statements
INTERNATIONAL BUSINESS
Usha Martin International Limited [UMIL]: UMIL is a wholly owned
subsidiary of the Company located in United Kingdom which enjoys presence in Europe
through its following wholly owned step-down subsidiaries with a production facility
situated at Nottinghamshire, United Kingdom: a) Usha Martin UK Limited b) De Ruiter
Staalkabel B.V. Netherlands c) Usha Martin Italia d) Usha Martin Europe B.V
The consolidated performance of UMIL during the year under review is
provided herein under:
GBP in Mn
UMIL |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| Turnover |
40.5 |
48.3 |
71.9 |
| PAT (including OCI) |
2.3 |
1.5 |
6.3 |
Brunton Wire Ropes FZCo [BWR]: BWR, located in United Arab Emirates
is a wholly owned subsidiary of the Company wherein the Company holds 75% of the paid-up
capital of BWR and balance 25% of paid-up capital is held Usha Martin Americas Inc (a
wholly owned subsidiary of the Company). The production facility is located at Jebel Ali
Free Zone in Dubai. The performance of BWR during the year under review is provided herein
under:
USD in Mn
BWR |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| Turnover |
20.6 |
29.3 |
36.6 |
| PAT (including OCI) |
0.6 |
2.2 |
2.6 |
Usha Martin Singapore Pte Limited [UMSPL]: UMSPL located at
Singapore is a wholly owned subsidiary of the Company which is in business of warehousing
and distribution of wire ropes in Asia Pacific region by itself and through its following
step-down wholly owned subsidiaries –a) Usha Martin Australia Pty Limited b) Usha
Martin Vietnam Company Ltd c) PT Usha Martin Indonesia d) Usha Martin China Company
Limited The performance of UMSPL during the year under review is provided hereinunder:-
USD in Mn
UMSPL |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| Turnover |
24.6 |
35.4 |
38.6 |
| PAT (including OCI) |
1.6 |
3.2 |
1.2 |
Usha Siam Steel Industries Public Company Limited [USSIL]: USSIL is
a subsidiary of the Company situated in Thailand in which the Company along with Usha
Martin Singapore Pte Ltd. holds 97.98% of the equity of USSIL. The production facility is
situated at Bangkok, Thailand. The performance of USSIL during the year under review is
provided herein under:
THB in Mn
USSIL |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| Turnover |
1,275.2 |
1,631.9 |
1,821.2 |
| PAT (including OCI) |
2.7 |
34.7 |
99.9 |
Usha Martin Americas Inc [UMAI]: UMAI is a wholly owned subsidiary
of the Company situated at Houston, United States of America. The performance of UMAI
during the year under review is provided herein under:
USD in Mn
UMAI |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| Turnover |
8.0 |
14.8 |
26.2 |
| PAT (including OCI) |
0.2 |
1.7 |
3.2 |
DOMESTIC BUSINESS
U M Cables Limited [UMCL]: UMCL is a wholly owned Indian subsidiary
of the Company, engaged in business of telecommunication cables. Its manufacturing
facility is located at Silvassa, India. The performance of UMCL during the year under
review is provided herein under:
Rs. in Crore
UMCL |
FY 2020-21 |
FY 2021-22 |
FY 2022-23 |
| Turnover |
93.2 |
103.9 |
111.7 |
| PAT (including OCI) |
2.7 |
7.9 |
0.6 |
KEY FINANCIAL RATIOS
The key financial ratios of the Company for the financial year under
review as compared to the previous financial year are provided herein under:
Particulars |
FY 2022-23 |
FY 2021-22 |
Change % |
| Debtors Turnover (days) |
40 |
47 |
(14.89) |
| Inventory Turnover (days) |
99 |
90 |
10.00 |
| Interest Coverage Ratio (times)1 |
20.2 |
9.1 |
121.98 |
| Current Ratio (times) |
2.3 |
2.1 |
9.52 |
| Debt Equity Ratio (times) |
0.2 |
0.2 |
- |
| Operating Profit Margin- EBIT (%) |
14.8 |
15.7 |
(5.73) |
| Net Profit Margin (%) |
10.5 |
11.7 |
(10.05) |
| Return On Net worth (%)2 |
21.3 |
25.7 |
(17.08) |
1 Interest coverage ratio has increased due to substantial reduction in
finance cost during Financial Year 2022-23.
2 The major reason for difference is due to inclusion of exceptional
item in Financial Year 2021-22.
OPPORTUNITIES, THREATS, RISKS & CONCERNS
Opportunities:
- Growth in oil & gas and renewable energy sectors specifically
offshore wind projects.
- Opportunities in Latin America mining sector is expected to augment
exports.
- Strong activity level in shipping and container terminals
- Supply chain disruptions and higher cost structures faced by global
competitors
- Revival in automotive sector and government policies for development
of infrastructure projects and thrust on "Make in India" will boost demand for
the Companys specialty products.
Threats, Risks & Concerns
- Slowdown of major economies might impact growth plans of the Company.
- Tightening of interest rate regimes by central banks of major
economies may continue to be a deterrent factor.
- Inability to pass-off the effect of adverse movement of prices of key
input materials and rising freight costs.
- Geo-political tension in Eastern Europe might adversely affect
supply-chain and receivables.
- Re-emergence of Covid may dampen business and operations.
OUTLOOK
While the next fiscal starts with speculation of global economic
slowdown, liquidity crunch due to interest rate hike to contain inflation by major
economies and continuation of supply chain disruptions due to geo-political tensions,
India as a nation seems to be more favorably placed considering its strong fundamentals.
Government spending in infrastructural and social welfare projects such as roads,
railways, water, and sanitation along with expected revival in the auto sector will give
an impetus to the demand of specialty products of the Company. With renewed focus on
specialty wire-rope business and strategic initiatives to consolidate leadership, the
Company is undergoing a strategic transformation. The Company is poised for sustainable
growth with value accretive capital expenditure plans, enhancement of specialty offerings
across industry segments, increase of geographical spread in strategic markets through
overseas subsidiaries and focus on digitization of processes.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal control procedures which is
commensurate with its size and nature of business in order to fairly ensure efficient
usage and protection of the Companys resources, accuracy in financial reporting and
due compliance of statutes and procedures. Further authorisation and approval levels for
various functions exist and are mapped within SAP environment to ensure controls at
source. The Company had engaged a firm of international repute to act as internal auditors
of the Company. The Audit Committee of the board periodically reviews Internal Audit
reports, progress in implementation of Committees recommendations and the adequacy
of internal control systems.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company appreciates that the talent management process is a key
differentiating factor for attaining the overall goals of the organization. The Company
continues to undertake various initiatives to nurture, generate and strengthen
competencies for continuance of sustainable growth of the Company. Talent acquisition is
done through multiple channels with focus on qualification, experience and leadership. The
Company continues with its various HR initiatives such as job planning, job rotation, job
enrichment, in-house and external training facilities for employees. There is an employee
engagement culture of care, connect, coach and contribute. Fresh graduate engineers and
diploma holders are recruited for creating talent pool through training and mentoring. The
Company has also taken an innovative approach to talent retention through "HR Apkey
Dwar" programme wherein there is a direct interaction between HR and employees to
understand their aspirations, grievances and suggestions for improvement. The Industrial
Relations during the year continued to be cordial and the Company has an executed
long-term settlement with recognized unions covering wages and service conditions. The
focus on development, upliftment and capacity building of stakeholders in surrounding
villages where the production facilities are located continues with fervour. The number of
employees is provided elsewhere and forms part of this Annual Report.
APPRECIATION
The Company has been getting necessary support and cooperation from all
stakeholders including customers, suppliers, value chain partners, investors, authorities,
lenders and employees of the Company to whom the Company expresses its sense of
appreciation.
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