Usha Martin- Coming out of Chaos

[abhishek_sinha]

Some insights from Bharat Wire Ropes Q3FY24.
Organized scrappily to save time. Source: [Concall Q3FY24]

Sales mix and customer insights
80% of revenues from exports. Most of the products are sold through distributors. Management could not ascertain which sectors were driving the demand. The commentary was generic - “getting good traction from all sectors”. Mgmt indicated they don’t have unique SKUs for different applications such as O&G and Marine.
Growth: Steel and product prices declining over the last few qtrs. Volumes have gone up. The company is increasing its global footprint, distribution, and working on new product lines. Expects 20% of revenues from special ropes in the next 2-3 years.

Cap utilization

• The strategy is to increase cap utilization from 60-65% to 80+% by de-bottlenecking.
• This will cost 25-30 Cr over the next 18-24 months.
• ROCE/Asset turns on capex: No clue.
• Capex: Only on the drawing board.

Competition: No clear answers on competition and the supply scenario.
Current order book: 150 cr, 2-3 months

EBITDA margin expansion over the last 2-3 years: We’ve achieved these numbers by putting numerous efforts - sales efficiency, product mix, cost controls. This business is asset heavy and asset turnover is low.

Q: Why are you being conservative?
A: Wire rope is a conservative product. Buyers don’t switch brands easily. We’re continuously adding new customers and products. We’re participating in conferences and exhibitions at global level.

Disclaimer: Invested

[Ascendant]

Usha Martin Muted Results

• YoY revenue - 802 cr Vs 838 cr
• YoY PAT - 107 cr Vs 84 cr (Good)
• QoQ revenue - 802 cr Vs 806 cr
• QoQ PAT - 107 cr Vs 109 cr

[Raj_A_A]

Q3 FY 24 Results. Decent Results.
Value added products save the day for Usha Martin.

Operating EBITDA up 23.7% Y-o-Y to Rs. 157.1 crore
PAT increases 27.9% Y-o-Y to Rs. 107.5 crore

Consolidated Performance Overview – Q3FY24 vs. Q3FY23:
• Revenue from operations decreased by 4.4% Y-o-Y to Rs. 797.1 crore in Q3FY24
o The core Wire-Rope segment revenues held steady, despite Y-o-Y reductions in sales volumes
and raw material prices, supported by enhanced realizations
o Realizations were supported by continued contribution from international markets and value-added
offerings
• Q3FY24 Operating EBITDA stood at Rs. 157.1 crore as against Rs. 127.0 crore, higher by 23.7% on a Y-o-Y basis .
• In the quarter, the Operating EBITDA margin was recorded at 19.7%, an increase from 15.2% in Q3FY23
o The Company’s sustained strategic emphasis on value-added products, coupled with its
expanding global presence, has been instrumental in enhancing margin performance consistently
o EBITDA margins including other income for Q3FY24 stood at 20.4%, compared to 15.8% in Q3FY23
• In Q3FY24, PBT amounted to Rs. 139.6 crore, registering a 27.3% Y-o-Y increase from Rs. 109.6 crore
• In Q3FY24, PAT amounted to Rs. 107.5 crore, registering a 27.9% Y-o-Y increase from Rs. 84.1 crore
• Basic EPS stood at Rs. 3.53 for the quarter as against Rs. 2.76 Y-o-Y

Commenting on the performance Mr. Tapas Gangopadhyay, Non-Executive Director said, “
Our strategic focus on high value wire ropes has ensured continued strong profitability, with our Operating EBITDA growing at 23.7% YoY during the quarter. However, this quarter had subdued contributions from our Wire & Strand and LRPC segments which impacted topline.

Capex: Our wave 1 Capex program, poised for commissioning, is a testament to our commitment to expanding our product portfolio in high-end value-added products across our business verticals. This strategic investment also reflects our ambition to set a new benchmark for excellence and to solidify our standing as a premier global player in the wire rope sector.
Looking ahead, Usha Martin is well-positioned to leverage its core strengths to drive future growth. Our improved financial and operational standing forms the foundation of this strategy. We are particularly confident in the strength of our in-house manufacturing and R&D capabilities, which, combined with our diverse product range and dedicated after-sales service, position us to effectively meet and adapt to global market challenges.
Our extensive network and established brand reputation further reinforce our capacity to secure sustained growth and value creation for all stakeholders.”

Press release:
c08021b6-4a35-496a-adab-d11fb14728b3.pdf (bseindia.com)

Investor Presentation:
b5b4658c-f563-4265-b79d-3274c99bfb7a.pdf (bseindia.com)

Discl: Invested from lower level.

[hitesh2710]

As per the q3 fy 24 concall, FY 25 will be an year of value added growth. ( sales growth with margins being sustained or improving depending upon how the LRPC and other lower margin business fare)

Capex to come on stream in next month (during q4 fy 24) and will start contributing from q1 fy 25 and will ramp up from there.

A lot of questions were asked about the prospects of the Saudi markets for the company. Company is the only producer in GCC area for Wire ropes and that should hold them in good stead. Plans for establishing manufacturing facility in Saudi Arabia would be considered after seeing the response to the foray.

There was mention of plasticated and other specialised varieties of LRPC products going forward. (already alluded to in previous concalls)

Logistics costs due to global geopolitical situation have gone up and is a risk, but it applies to all the players catering to European markets.

Balance sheet remains healthy in terms of overall debt, cash flow, free cash flow, and working capital.

[Shiveroptimism]

Usha Martin Q3FY24 Concall Summary

Present on the call :Rajeev Jhawar (MD), Anirban Sanyal (CFO), Shreya Jhawar (Strategy and Growth Team)

Management Tone : Extremely confident and Bullish.

Management

• UML Wire rope realisations have consistently shown an upward trend, particularly visible in the wire rope products which have helped the company in increasing EBITDA margins.
• In FY23, the focus of the management was one Value. From next year onwards, the focus will be on Value led Volume growth.
• Growth Initiatives taken by management in Q3FY23-

1. Management has set up a step down subsidiary company in Saudi Arabia, through its Dubai Subsidiary (Brunton Wire Ropes), to target the growing market and the massive opportunity (led by initiatives of the new Crown Prince). Through this entity, the management, under the EMM brand, wants to provide value added services for ropes similar to other service centres in Europe. Value added segments catered through this entity include Oil & Gas, Ports, Cranes, Construction and Infrastructure apart from general engineering ropes. This is expected to start from Q1FY25, as equipment has already been ordered. Plant setup for this will start firstly as a service centre for value added ropes (cutting, coiling, testing) and a distribution point for customers in Saudi Arabia. Recently, through Usha Siam, management has acquired the remaining 50% stake in TEZAC Wire ropes (Japan). Previously, it was a 50:50 JV between both the companies. Management wants to use this facility to manufacture high value elevator ropes.
2. Management is planning to enter the highly valued added Synthetic Sling rope market through its UK plant (Brunton Shaw). This will be the company’s first foray into the synthetics space. Company is investing 4.5 mil pounds (5.5 mil dollars).This could start showing a positive outcome in 2-3 years time.
3. Management has set up cross functional groups in the key growth segments such as Mining, Elevator, Fishing.

• Management wants to continue to maintain and grow margins led by increase in volumes of wire rope coming in from new capacity expansion. They want to grow it to 20% on a sustainable basis (even with poor margins in LRPC) and then push it to 20%+ margins.
• The margin profile of the GCC business will be similar to the Europe and US markets for value added ropes but will see some competition for GP ropes led by increased competition here. To tackle the competition in GP ropes in this market, the company has

1. Value added services (rigging services) last year in the Dubai Plant
2. Contained the share of GP ropes in the business while focusing on crane and oil & offshore ropes (60% now vs 47% last year)

Business

• During the quarter, pricing pressure in the wire, strands and LRPC segments impacted the topline. This was controlled to an extent due to the mix of core wire rope business.
• Revenue mix 9MFY24- Wire rope (70%) up from (67%) last year same Q, Wire & Strand (9%) and LRPC (12%).
• Share of value added industry segment now 49% vs 44% last year.
• Share of value added business in the wire rope category now 70% vs 65% last year.
• International business now contributes 55% to the topline.
• The integration of the international businesses with the Indian Operations is showing encouraging growth synergies and creating a collaborative approach across global and local teams.
• Through this integration, the company is supplying wire and strands as raw materials for high value added ropes made by Brunton Shaw in Europe. This is giving a competitive edge to the company on a cost front compared to the international peers and is helping the company to win market share.
• The growth in the European market for the GP rope segment is slow but the same for high end ropes continues to have a strong market. As per management, they will continue to do well in the European market led by a strong order book.
• Brunton Shaw UK continues to see strong growth. Management expects it to grow 30% in FY24. This growth is supported by strong growth in products like OceanMax and CraneMax brands supplied to high end customers.
• Now, Company also has approvals from OEM suppliers in Europe for Elevator ropes.
• There is good traction in Mining as well, as the business has been able to win key contracts with OEMs in US & Europe led by the MineMax brand.
• The US market is seeing good traction for Mining ropes where the company did some trial orders and has received good feedback from customers. There is a good demand for Crane, Elevator and Gondola ropes in this market
• Through the US market, the company caters to the South American market (Brazil, Chile, Peru and Columbia region) where the company has done well in the mining market. Company has also gotten traction in the port segment of this market with some contracts being done and the fishing market of LATAM where the company has gotten some trial orders.
• Company has started getting repeat business from premium customers in both the US and Europe.
• In the India business, management sees good potential from the Parvat Mala project of Govt to establish big ropeways. Moreover, they see a good potential from the big infrastructure projects in India (Highways, railways) where there will be good demand for plasticated and galvanised LRPC. Growth here will be similar to India Market growth and the company will retain similar market share.
• EBITDA/tonne was ~Rs 34,000 in Q3FY24 up 33.3% from Q3FY23. This is the highest number till now.
• Company has increased inventory levels to be well prepared in anticipation of demand in the coming Quarters.
• Phase 1 of the Brownfield Capex done in Ranchi (300-310 crs) is set to be completed in Q4FY24 (within 1 month). Volumes from this will start from Q1FY25. This will help the business generate at least 15,000 Tons more volume of ropes (both special and normal ropes)in FY25. This number could be higher looking at the demand environment. This will add to the revenue in the coming Quarters. Phase 2 capex will be completed in the next 18 months. A lot of imported equipment ordering has been done for Phase 2.
• Combined additional capacity from Phase 1 and Phase 2 capex will be 45,000-50,000 tons. Phase 1 will help the company reach 30,000-35,000 tons of capacity increase. Phase 2 will add 10,000 to 15,000 tons. This will add capacities to all the different categories of wire ropes and LRPC.
• This phase of expansion includes the increase of capacities for higher valued added products such as crane ropes, compacted ropes, plasticated ropes, oil and offshore ropes. This phase also includes expenditure towards modernisation of facilities.
• Company is focusing on getting into value- added LRPC- Galvanised, Plasticated and PVC coated where they have got some good orders. The ramping up of these orders will take a few Quarters.
• Management is also looking for opportunities of using the wire drawing and patenting facilities of the LRPC line to get into other valued added wires both for domestic and Brunton Shaw units.
• Net debt to equity improved to 0.05x as of Dec '23 despite the capex spend of 196cr in 9MFY24.
• CFO for 9MFY24 stands at 423 cr (94% of operating EBITDA) vs 214.5cr for 9MFY23 (60% of operating EBITDA).
• All International Subsidiaries are performing well and have decent growth. This will continue going forward.

Risk

• In the LRPC segment, they are not the biggest player and have been impacted by the larger volumes from players who are backward integrated into steel. This has led to an impact on the realisation of the LRPC segment. Management expects a few difficult quarters going forward in this segment wrt to margins.
• Brunton Wire Rope (Dubai) is the only wire rope producer in the GCC region till now. This gives the company some advantage. However, some other local producers and service providers are entering this market region led by favourable policies. GCC is a big market that is also attracting Korean, Chinese and even European Players which can lead to increase in competition.
  *Due to the Red sea issue, firstly, the transit time for goods to US and Europe will increase by at least 15-20 days (30% increase in time) coupled with higher freight. This will be a global industry wide problem for players supplying to these markets. Management hopes to pass on this increase in costs to customers. Secondly, there could be increased working capital needs due to increased transit times.

One of the best concalls I’ve heard this earnings season. So, tried to make it as comprehensive as possible.

[Chandragupta]

What strikes me as most remarkable from the concall is the statement that they are able to get a ‘value driven pricing’ for the wire rope business (which now constitute 70 % of the revenues). If true, this is amazing in a product like wires ropes which are essentially commodity conversions with of course, some engineering expertise involved. But it is rare to delink pricing in such products from the underlying commodity prices, which we see largely in consumer goods or service industries.

Very creditable to achieve such “branding” in something like wire ropes, I think.

[ranvir]

Usha Martin -

Q3 FY 24 concall highlights -

Revenues - 797 vs 834 cr
EBITDA - 157 vs 127 cr ( margins @ 20 vs 15 pc )
PAT - 108 vs 84 cr ( margins @ 13 vs 10 pc )

Segmental revenues -

Wire Ropes - 561 vs 562 cr ( despite YoY reduction in volumes and RM prices. Enhanced realisations and value added products supported the revenues )

Wire and Strand - 74 vs 83 cr
LRPC - 92 vs 118 cr

Geography wise revenue break up -

India - 45 pc
EU - 24 pc
Asia Pacific - 15 pc
Middle East - 10 pc
Americas - 6 pc

EBITDA/Ton for the company @ Rs 34018 vs Rs 25526 YoY

Net Debt @ 110 vs 191 cr YoY

Wave 1 Capex - poised for commissioning is a testament to company’s commitment to expand in high end value added products across their business verticals

Contribution from high margin Wire Ropes segment up at 70 pc vs 67 pc LY

Have set up another subsidiary in Saudi Arabia to take advantage of high growth Saudi Mkt. Operations to start in Q1 FY 25. This should eventually be a large and fast growing market

Have acquired remaining 50 pc in their JV company in Thailand from the Japanese partner

Planing to enter Synthetic slings Mkt through their UK subsidiary

The ongoing capex ( Wave 1 ) should be complete by q4. Sales from this capex may start flowing in from Q1 next FY. Full ramp up may take some more time

Have supplied to a number of premium customers in US, EU over last 1-2 yrs. Expecting order flows from them to flow through for the company as we go forward

Company intends to get into value added LRPC segment like - plasticised / galvanised / PVC coated LRPC etc as the plain vanilla LRPC is a commodity / low margin kind of business

Expect descent volume growth in the high margin Wire Rope segment in next FY as the new Capex goes on-stream

Aim to maintain the high margins seen in Q3 in the next FY as well. This should be possible as the share of value added sales is steadily improving

Company’s subsidiary in the Gulf is the only meaningful company in the wire rope segment in that geography. Plus the Govt’s there are encouraging local companies. However, expect competition from Japan, Europe, Korea etc to join in the party as the business picks up

Red Sea issue is a short term headwind for the company. This may also lead to increased travel time for export deliveries and hence higher working capital requirements

Company’s foray into Synthetic Slings is an exiting, high end, high value added area. May bear descent returns in 2-3 yrs time

Wave - 2 capex completion should take another 18 months from now. Capacity addition should be around 50k Tons ( wave - 1 and 2 combined ). Current capacity is around 200k tons. So the total capacity would expand by 25 odd pc for the wire ropes segment

India growth continues to be strong. Company has aprox 60 pc Mkt share in India. Govt’s focus on setting up new Wire-Rope connected destinations should act as a further tailwind

Disc: holding, added more recently, biased, not SEBI registered, not an investment advice

[Sid_Mathew]

More Selling by Peterhouse.

[Pinak_Kapadia]

Usha Martin .pdf (648.9 KB)

CFO and whole time director of the company - both being changed together after the existing ones have resigned.

The resignation of the CFO is dated 6/1/24 means this must be planned since a while. Maybe the exchange should have been notified sooner?

[Raj_A_A]

Usha martin Q4 FY24 results _Flat
Revenue declined marginally by 1.3% ( Annual rev from Rs 3268 to Rs 3225) and 3.3% down on Y-O-Y
EBITDA down marginally 1.6% (Y-O-Y) and 3.5% (Q-O-Q) . Margin up by 16.6% annually courtesy specialised Wire rope division rev.
Wire Rope Divn contribute 71% overall Rev which cushions the fall in LRPC and Wire & Strand division.
FY 24 PAT increases by 21 % over FY 23 while quarterly PAT increased by 1%.

Consolidated Performance Overview – Q4 FY24 vs. Q4 FY23:
• Revenue from operations decreased by 3.1% to Rs. 829.0 crore in Q4 FY24
o Although both the Wire & Strand and LRPC segments witnessed declines, the consistent
performance from core Wire Rope segment supported overall revenues
• Q4 FY24 Operating EBITDA stood at Rs. 151.5 crore as against Rs. 154.0 crore, lower by 1.6%
o Operating EBITDA margin was recorded at 18.3% in Q4 FY24 compared to 18.0% in Q4 FY23
o EBITDA margins including other income for Q4FY24 stood at 19.4% compared to 19.3% in Q4FY23
• In Q4FY24, PBT amounted to Rs. 136.4 crore, a 4.1% Y-o-Y decrease from Rs. 142.3 crore
• PAT amounted to Rs. 106.3 crore in Q4 FY24 from Rs. 105.3 crore, up 1.0%
• Basic EPS stood at Rs. 3.49 for the quarter as against Rs. 3.4

Consolidated Performance Overview – FY24 vs. FY23:
• Revenue from operations decreased by 1.3% to Rs. 3,225.2 crore
o Although both the Wire & Strand and LRPC segments witnessed declines, the consistent
performance from core Wire Rope segment supported overall revenues
• Operating EBITDA stood at Rs. 598.6 crore as against Rs. 513.3 crore, increasing 16.6%
o Operating EBITDA margin for the period was 18.6% vs. 15.7%
o EBITDA margins including other income stood at 19.8% in FY24 as against 16.6% in FY23
• PAT stood at Rs. 424.1 crore as against Rs. 350.6 crore, up by 21.0%
• Basic EPS stood Rs. 13.92 for FY24 as against Rs. 11.51 in FY23
• Operating cash flow before tax in FY24 stood at Rs. 560.5 crore as against Rs. 345.5 crore in FY23.
Operating cash flow before tax to Operating EBITDA in FY24 recorded a healthy improvement, standing at 94% compared to 67% in FY23

Commenting on the performance Mr. Tapas Gangopadhyay, Non-Executive Director said, FY 2024 ended on a positive note with robust operating cash flows reflecting strong performance.
Despite facing macro-economic challenges, the Company managed to generate an 18.6%
EBITDA margin during the year. Notably, core wire ropes division continued to perform well and
contributed 71% to our overall consolidated revenues.

Capex Program
The wave-1 capex program at our Ranchi facility is progressing well and we anticipate commercial operations to commence from Q1 FY25 onwards. These new capacities are mainly focused on enhancing the Company’s value-added segment. The facility to be ramped up over the next 9-12 months and to contribute meaningfully to the performance over the next two years.
FY24 also saw notable advancements in strategic initiatives, including enhancements in value-added offerings, deepening engagement with OEMs and expansion of our international presence.
Usha Martin’s solid foundation and strategic focus position well to drive sustained growth, enabling to strengthen position as a leading global player in the wire rope sector. Additionally, our healthy balance sheet gives us the flexibility to support ongoing growth initiatives. Through targeted initiatives, we aim to create lasting value for all our stakeholders, foster innovation, and expand our reach across international markets.

Discl: Invested

[Jitendra_Vyas]

@Raj_A_A

Usha Martin’s solid foundation and strategic focus position well to drive sustained growth, enabling to strengthen position as a leading global player in the wire rope sector. Additionally, our healthy balance sheet gives us the flexibility to support ongoing growth initiatives. Through targeted initiatives, we aim to create lasting value for all our stakeholders, foster innovation, and expand our reach across international markets.

any reason provided by company for declining net profit since last 2 quarters?

[Raj_A_A]

Marginal decline in PAT should not be a worrying factor though no reason is specifically provided by the management for flat results. Their value added segment(Wire Rope) is doing well and their capex which will go on stream during Q1FY 25 with the ramp up in 9- 12 months give revenue visibility for next two years.

[Shiveroptimism]

Usha martin rough concall notes

Volume growth guidance is 12-15%. They have guided for maintaining margins around current levels (19-20%) and gradually grow them over time. Brunton shaw order book is 7-8months. India business is 1-2 months but majority of the business here is the annuity part o&m buisness (common in industry). On the EBITDA/Tonne drop, they mentioned to track the number on yoy basis. Going ahead, they want to reduce their exposure to lrpc, to focus on the plasticated and galvansied part of lrpc (steel wire rod prices down 6000rs and on an overall lrpc level prices down by 8000rs in FY 24 due to increased competition. Wire prices down to 80k per ton from 90k per ton) . New capex is live as of Q1FY25 and ramp up will take 9-12months. Phase 2 capex to get completed in 12-18months. Asset turns on the current deployed capital for the capex will be 1.5-2x with ~70% utilisations. Management doesnt want to push volumes by compromising on the price and margins and is hence ramping it up gradually and focus on value added products. Phase 1 capex capacity addition-40,000 ton (and phase 2- 10,000 ton (both from internal accruals). In the phase two of capex, they will get into high value added aluminium and zinc wires category for example in mountainous regions as a rockfall barrier protector ropes ( “decent value product”) and mining segment. They have started their shipments (oil, crane and port segments)to Saudi Arabia and revenues will start from Q1 and gradually pick up. Thailand facility has capacity of 180 tons per month and is focused towards elevator (US focus) and GP ropes. Facility has land for further expansion. Synthetics sling business (oil and gas and wind energy) to start from Q2 ( will start for customers in UK and europe and management wants to get into America at a later stage) as they currently in the process of acquiring all the equipments.

There was a disclosure related issue raised related to GDR options( 1 to 5 shares) with Peterhouse (the other brother) which is disclosed in the BS. Overall tone seemed a little less bullish compared to previous Q. Management seems to be focused at maintaining current margins while driving the topline with volumes so less scope of major margin expansion in FY25.

[Chandragupta]

@Shiveroptimism

There was a disclosure related issue raised related to GDR

Actually, there was no ‘issue’, the person asking the question did not know how GDRs work. A GDR is just a group of equity shares bundled together (5 shares to 1 GDR in this case), so when GDRs are issued, the underlying shares already become part of the issued and paid-up equity capital. Conversion of GDR into equity shares does not result in any new dilution. And there is no pre-defined “conversion price” since the conversion is just an exchange of x GDRs for 5x equity shares, money is not involved.

[ranvir]

Usha Martin -

Q4 FY 24 concall and results highlights -

Revenues - 829 vs 855 cr
EBITDA - 152 vs 154 cr ( margins remained stable at 18 pc )
PAT - 106 vs 105 cr

Segment wise revenues -

Wire Ropes - 607 vs 598 cr ( this is the high value add, high margin segment for the company )
Wire and Strand - 66 vs 79 cr
LRPC - 85 vs 105 cr

Wire Ropes - contributed to 71 pc of sales vs 67 pc YoY - indicating an improvement in quality of business

Export:Domestic sales breakup stood at - 55:45

EBITDA / Ton for Q4 @ Rs 31728. It remained in the 31k -34 k band throughout FY 24

Gross Debt @ 292 vs 347 cr YoY
Net Debt @ 124 vs 191 cr YoY

Wave - 1 capex at Ranchi facility is expected to commence commercial production in Q1 FY 25. New capacities are mainly focussed on company’s value added segments. Meaningful ramp up from this facility is expected in 9-12 months

Wave -2 of Ranchi capex ( company is spending 167 cr for this phase ) is expected to be completed in 18-24 months

Demand scenario remains stable. Order book is also healthy. However - since 85 pc of company sales are in the replacement segments, company is generally not too dependent on new order flows

Brunton Shaw - company’s subsidiary in UK is now sourcing from India and Thailand. This gives them a cost advantage of $300-400 / Ton which is critical. Brunton Shaw also has on order book of 6-8 months at hand

Because of logistical issues due red-sea disruptions, some of company’s sales have been pushed into Q1 - from Q4. Also due to planned maintenance of 06 weeks wrt LRPC making equipment, company lost production in Q4. But for these, Q4 growth would ve been higher

Expecting a 12-15 pc CAGR volume growth in FY 25,26

Rock Knitting wires - used in mountainous terrains is a lucrative opportunity both wrt volumes and margins. Company expects its capacities to make specialised Aluminium, Zinc wires for this segment to go live in FY 25

Saudi Arabia - Mkt demand is buoyant, plus it’s a large mkt. Oil/Gas, Infra, Ports - segments in Saudi Arabia are generating good demand for company’s products. Should start to contribute meaningfully to company’s revenues in FY 25

Synthetic Slings - is another segment that company is planning to launch wef Q2 FY25. To initially supply to UK, European mkts. It finds wide applications in Wind energy , Oil-Gas sectors

Aim to be around 20 pc kind of EBITDA margins in FY 25

LRPC segment is seeing pricing pressure due increased competition. Company is trying to focus more on the plasticated, galvanised LRPCs to protect its margins

Wave - 1 capacity coming on stream is around 40,000 MT/yr. Wave -2 capacities are around 10,000 MT/yr. Company sold around 1,80,000 MT in FY 24

Currently - US contributes to around 5 pc of sales. Targeting - manning ropes, elevator ropes and gondola ropes - as growth areas in the US mkt. Plus these r high margin products

Company is making very good inroads wrt new customer acquisition in EU mkts ( specially in oil/gas - offshore and wind energy segment ) - expecting to receive meaningful orders from new customers in next 2-3 Qtrs

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

[Hemant_Kumar2]

Revenue sequentially was up 3% while expenses have gone up by 7%. Is it because of input cost appreciation or high logistics cost due to red sea disruption?

[rcinvestor999]

[pravinamirth]

Parvatmala project could be a big trigger for Usha Martin

[Nishant_Sampat]

Rating upgrade

Usha Martin Limited.pdf (787.8 KB)

[ganeshrpl]

I attended the AGM for Usha martin yesterday. Below are my brief notes. Any mistakes are solely mine in capturing and drafting them:

• We went through a challenging period with significant learnings from past mistakes.

• After selling the steel business to Tata, the focus shifted entirely to the wire rope business.

• Continuous improvement in business performance over the last 5 years, despite the initial impact of COVID-19. Focused on maximizing resources, capacities, and capabilities during the first 2-3 years.

• Focused on integrating all the international businesses in the company.

• Initially focus was on consolidation before launching an expansion program.

• Current expansion involves an investment program of approximately ₹300 crores, with allocations as follows, to be implemented over the next 2-3 years:

• • 67 crores in our Thailand plant,
• • 40 crores in our European business, and
• • the rest in our plant in India [~190 cr ]

• Implemented digital initiatives:

• • upgrading SAP to HANA and rolling it out across all subsidiaries to improve efficiency and information access.
• • Salesforce to improve integration with subsidiaries and enhance customer service.

• The company plans to partner with government initiatives like Parvat Mala for upcoming rope projects across India.

• R&D is the backbone for UM, its supported by a center in Italy that collaborates with all with our manufacturing facilities and customers.

• Women empowerment: For UM In India percentage is low, but have taken major initiatives for recruiting more women. Internationally have a good balance.

• Renewable energy: Evaluating setting up Solar projects. Considering a few options right now. Will be investing in the next couple of years.

• Compliant with all ISO systems, essential for global supply capabilities.

• Partnering with Dupont to enhance safety standards across the organization, including fire, process, occupational health, and electrical safety.

• Two joint ventures (JVs):

• • Pengg USHA in Ranchi, showing good performance over last 2-3 years, with plans for expansion.
• • The other JV is with a corporation of Japan [Kobelco?] - has been for last 10 years. acquired the remaining 50% stake from them in Feb this year. Its well-integrated with our Usha Siam facility. incrementally increasing production, should give good returns over the coming years.

• QIP: No plans for a QIP in the near future, as the company is almost debt-free, with most projects funded through internal accruals!

• Employs approximately 3,000 permanent employees globally.

• Raw materials suppliers: 4 suppliers include Tata Steel, JSPL (40km away from Ranchi plant), JSW, and possibly [Electro Steel?] - excellent relationship with them

• Shipping: Global geopolitical challenges are resulting in longer shipment times from India, Thailand, to Europe and US, because of the Dead Sea issue - is resulting in delays in in the time required to reach. this is also resulting in increasing the inventory within the system, and 1 of the reasons why the inventory turnover is are higher.

• Domestic market: is robust, supported by government infrastructure projects and public private sector to spend more investment on capex - more demand for wire ropes - expect growth in both domestic and international markets.

• Credit rating recently upgraded from A to A+ with a stable outlook by India Rating, this is expected to reduce the cost of funds in the future.