Wire Rope-maker Usha Martin Feels Heat of High Fuel Cost

The recent acquisition of the Binda and Sasai coal block in Jharkhand will ensure availability of fuel to wire rope maker Usha Martin. But on the flipside, the higher cost of fuel will add further pressure on the company's stretched balance-sheet.

Usha Nartin clinched the partly developed Binda and Sasai asset at an aggressive bid of 1,804 crore  for every tonne of coal to be produced. The asset is expected to be operational in the next two years. Till then, the company has to survive on open market purchase of the fuel.

Squeezed margins

Usha Martin was previously allocated two assets (Kathautia and Lohri) through the now-scraped captive dispensation policy. Of the two, Kathautia was operating. The allocations were cancelled following an apex court ruling in September 2014. According to AK Somani, President (Finance) and Chief Financial Officer of Usha Martin, the cost of sourcing fuel from the newly allocated mine would be 40 per cent higher. The higher cost would have to be "internalised", he said, indicating likely squeeze in the operating margins.

source: You are not allowed to view links. Register or Login