Usha Martin sees higher profit next quarter

Written by fe Bureaus | Kolkata | Updated: Oct 29 2009, 06:42am hrs
Usha Martin Ltd, one of the worlds largest wire rope manufacturer and makers of specialty steel, is looking at higher profit from the next quarter with its proposed steel capacity expansion under way and the backward integration project is due for completion.

Rajeev Jhawar, managing director, said the companys specialty steel making units will be running at double capacity from November. Its 73mw captive power plant and the DRI unit have already been commissioned in October.

Usha Martin is increasing its specialty steel capacity from 350,000 tonne per annum to 700,000 tpa.

Once we complete our process of coal integration, we will be well placed to increase profitability, Jhawar said.

The company has secured linkages to coal blocks in Jharkhand with recoverable reserves of 30 million tonne of high- grade coal. This is expected to save the company around Rs 45 crore from the next quarter with costs coming down to Rs 1200 from around Rs 1900 for every tonne of coal consumption.

The profit before tax stood at Rs 57.97 crore on a net sales of Rs 887.38 crore during the first six months to September 30, 2009, against a PBT of Rs 144.24 crore on a net sales of Rs 1084.25 crore last fiscal.

Jhawar said, "From the next fiscal, we expect our profits to go up, but this would be more on account of operational efficiencies than recovery of steel prices.

Prices of high carbon grade steel, currently selling at Rs 30,000 per tonne and specialty steel at Rs 38,000-40,000 per tonne, are expected to remain stable for at least another six months." However, margins in rope business is expected to go up by another 2% in the coming quarter, Jhawar said.