It gives me great pleasure to inform you that Usha Martin Limited has shown animprovement in its operating results during the full year 2017-18 and more particularlyduring the fourth quarter of 2017-18. Both businesses of the Company viz. Steel and Wire& Wire Ropes (WWR) have witnessed a turnaround during the last Financial Year. Giventhe strong fundamentals of the Indian economy and the industry dynamics the Company isexpected to further improve its performance in the ensuing Financial Year
Macro-economic fundamentals of the Indian economy indicate a continued growth recoveryduring the Financial Year 2018-19 with an estimated growth rate of 7.4%. The globaleconomy steadily growing albeit at a modest pace; larger economies like USA EU and Chinaare growing at a lower rate than their respective trend growth rate. Some of the largecentral banks across the geographies continue to pursue accommodative monetary policywhile the US Federal Reserve has been gradually raising interest rates. Possible headwindsto the global economy inter alia include a withdrawal of monetary accommodation at anincreased pace a sharp rise in the price of crude oil and a possible trade war betweenUSA and China. Besides this the geo-political risks like an escalation with Iran and/ orNorth Korea may unfold significant risks to a peaceful growth.
Sectors relevant to the Company's businesses like commercial vehicles tractors andinfrastructure have shown robust growth in the last year and continue to indicate promisefor continued strength. According to World Steel Association (WSA) China has shut downmost of the Induction Furnace based steel capacities during the year 2017 which togetherwith better domestic demand in China has helped balance the global steel demand-supplyscenario leading to improvement in steel realisations. According to CRU China is also ontrack to further cut down its steel capacities to bring it below 1 billion tons by 2020(from 1.2 billion in 2015) which is expected to keep global steel markets balancedconsidering a moderate growth in aggregate steel demand. WSA expects the steel demand inIndia to grow at a healthy rate of 5.5-6% over 2018-19. It would therefore be reasonableto expect the buoyancy in steel continuing for some time. WWR Business has also witnessedstrong demand revival in most of the end-use sectors except offshore oil and gas segment.
Your Company in the meantime has been working actively to bring about improvements inoperational efficiencies to reduce conversion cost. It is also focussed on enriching theproduct mix in order to improve profit margins. It is an ongoing journey and we continueto be optimistic about the future of the Company. In order to improve the long termfinancial health of the Company the management is also endeavouring to reduce leverage onthe Balance Sheet by divesting one of the core businesses of the Company.
I gratefully acknowledge and thank all shareholders lenders vendors employees andother stake-holders in this difficult time for their unstinted support. We shall continueto put in our best efforts to ensure a bright future for our Company.
G N Bajpai
Date: 21st May 2018