Wire rope manufacturer Usha Martin Ltd (UML) is expecting domestic demand, particularly in construction and auto sectors, to start picking up post monsoon.
According to Rajeev Jhawar, Managing Director, UML, the various measures announced by the Central government to boost the economy are likely to start yielding results post monsoon.
“We expect post monsoon things should be better. There should be a pick-up in demand during the festival season post September-October, by which time we hope that the Covid situation would also be brought slightly under control,” Jhawar told BusinessLine.
While the demand for wire rope has been “fairly decent” in international markets, the domestic demand across various sectors has been very low due to the lockdown in the wake of the Covid-19 pandemic, he said.
The reverse migration of labourers had affected industries such as construction, particularly in the western and northern regions of the country. This impacted the demand for wire rope.
Ramping up capacities
UML’s wire rope business manufactures wire, strands, LRPC and wire ropes, which cater to various industries, including steel, infrastructure, construction and auto.
“The demand from construction, auto and oil sectors is down. Our plant is currently operating at 50-55 per cent of the installed capacity. The export demand is, however, good and the rupee depreciation is supporting us,” he said.
The company is hopeful of ramping up capacities by the second half of this fiscal once the Covid situation is brought under control and the domestic demand starts picking up.
UML has a manufacturing capacity of around 2,30,000 tonnes per annum across its two facilities in India — at Ranchi (Jharkhand) and Hoshiarpur (Punjab) — and three overseas units in the UK, Thailand and Dubai.
Talking about exports, he said the demand for wire rope has been “fairly decent”, if not strong, from markets such as Europe, the US, South America, Australia and South-East Asia.
Exports account for close to 40 per cent of the company’s consolidated turnover, which stood at around ₹2,154 crore for the year ended March 31, 2020.
Usha Martin, which sold its one-million-tonne integrated steel plant at Jamshedpur to Tata Steel for ₹4,200-4,600 crore, completed the first full year of operations of its wire rope business in FY20.
The loss in production following the lockdown and subsequent weak demand are likely to impact its topline in FY21. However, the various cost reduction measures undertaken by the company would help it achieve break even or marginal profits by the end of this fiscal, he said.