Rajeev Jhawar talked to investors and analysts at Usha Martin's earnings conference call for FY2023.
Usha Martin is one of the world's leading manufacturers of specialty steel wire ropes with over 60 years of experience. The Company offers a wide range of products including specialty wire ropes, high quality wires, LRPC, customized end-fitments, accessories, and related services. These products are used in industries such as oil and gas, ports, cranes, elevator, mining, fishing, renewable energy, construction and infrastructure and general engineering, among others.
The company conducts FY2023 earnings conference call for the investors and analyst community for the betterment of their business relations. “Our goal is to hold such forums regularly in the future with the aim of increasing transparency and building a stronger relationship with the investors and analyst community”, said Rajeev Jhawar Usha Martin, MD
Usha Martin has manufacturing facilities in India along with plants overseas in Thailand, UAE and the United Kingdom. The business model is primarily to stock and sell through their own distribution centers worldwide in Southeast Asia, Australia, Europe, US, and UAE and also do some direct sales from the plant. UML have dedicated service centers where they provide value additions such as cutting, socketing, testing, inspection and so on. The Company also has a global R&D center located in Italy, where it designs wire ropes using proprietary software.
Rajeev Jhawar also shared details about how Usha Martin deleveraged their business, “In the past, Usha Martin was involved in the steel-making business which was impacted due to the severe downturn in the industry and high leverage of the Company. To overcome these challenges, we undertook divestment of the steel business by way of a slump sale. It is important to note that the Company never defaulted, did not go for debt restructuring and there was no haircut by any of the lenders. This exercise enabled the Company to significantly deleverage and turn around our financial and operational position. While it was a tough decision at that time, this helped us transform from a commodity business to a value-added high ROC business”.
According to Rajeev Jhawar, MD, Usha Martin through this:
Was able to grow their margins and profitability despite the volatility in commodity prices that is their raw material, basically the steel.
The barrier to entry in the industry are high because of the long customer approval cycle and critical applications. As some of you know, wire ropes are highly engineered products that need to meet the highest standards of reliability and performance. Now, with the renewed focus on the specialty wire rope business, Usha Martin has undertaken strategic initiatives to enhance its production capacity for wire ropes, diversify its product range, restructure its cost, secure its raw material sources, and strengthen its financial position.
Post the turnaround and stabilization of the business, Usha Martin adopted a new dividend policy in FY22. “I am delighted to share that the Board has recommended a healthy dividend of Rs. 2.5 per share for FY23, amounting to a total cash flow of Rs. 76.2 crore after taxes. Our commitment to all shareholders remains strong, and our Board will continue to prioritize a balance between investing in the business to pursue growth opportunities and rewarding shareholders through dividends”, Rajeev Jhawar Usha Martin , MD explained.
He concluded by saying that Usha Martin has successfully navigated its past challenges and has made substantial progress in the last 3 years. Today, he strongly believes that Usha Martin is in a very exciting phase. Rajeev Jhawar is confident that the company is well placed to capitalize on the significant growth opportunities which the industry has to offer. He looks forward to for the continuing support from the investors and the community in their journey where they will create long-term sustainable value for all the stakeholders.
The session was carried on by Mr. Anirban Sanyal, CFO of Usha Martin, who then explained through the operational and financial highlights for the quarter ended 31st March 2023.