Usha Martin (517146) Q4 01/02 earnings summary

Executive summary

• FY ended 31 Mar 2002 was difficult; integrated steel and wire products helped offset a 17% cable price decline and supported operating cash flow of Rs 64 cr, as stated by the Chairman.

• Strategic focus: integrate steelmaking, expand exports, shift wires and ropes toward higher-value branded products, and reduce costs and reliance on telecom cables.

• Standalone turnover was Rs 929.98 cr and post-tax profit Rs 6.03 cr; the prior comparison covered 15 months, limiting comparability.

Financial highlights

• Standalone sales and other income totaled Rs 9,299,779 thousand; PBT was Rs 80,602 thousand and PAT Rs 60,273 thousand for the 12 months ended 31 Mar 2002.

• Consolidated sales and other income were Rs 12,729,300 thousand; PAT after minority interest was Rs 49,187 thousand for FY02.

• Standalone operating cash flow was Rs 1,214,147 thousand; cash and bank balances at year-end were Rs 423,837 thousand.

• Proposed standalone equity dividend: Rs 0.50 per Rs 5 share, or 10% of face value.

Outlook and guidance

• Management targeted steel exports of 50,000 tonnes in FY03, following exports exceeding 30,000 tonnes in FY02.

• Personnel and administrative costs were targeted below 8% of turnover by FY03-end, after reaching 8.9% in FY02 versus 10.5% previously.

• About Rs 120 cr of investment was planned over two years for cost reduction, power generation and higher-value products; management expected benefits to integrated steel and wire businesses.

• Management expected cable-business contribution to decline to 10–15% over five years from below 20%, as integrated businesses grew; cable exports were a focus.

• FY03 outlook was cautiously optimistic for cables and more positive for steel, with the blast furnace operating at full capacity and improved steel and wire-rope momentum continuing into the current year.