USHA MARTIN LIMITED

Company profile Usha Martin Limited was started in 1961 in Ranchi (Jharkhand) as a wire rope manufacturing company. Today the Usha Martin Group is a Rs.3000 crore conglomerate with a global presence. The products are, wire rods, bright bars, steel wires, specialty wires, wire ropes, strand, conveyor cord, wire drawing and cable machinery. Incorporated in 1960 Mr. B.K. Jhawar, the present chairman, pioneered it. It was promoted to manufacture steel and wires ropes in a collaboration with Martin Black of Scotland as a joint IndoBritish venture. From 1st October 1997, this company has been merged with Usha Beltron Ltd which has been renamed as wire and wire ropes division, within which six companies are included.

Company History - Usha Martin Ltd.

- The company was incorporated on 22nd May, and obtained the Certificate of Commencement of Business on 17th July, 1986. It was promoted jointly by Usha Martin Industries Ltd. (UMI) and Bihar State Electronic Development Corporation Ltd. (BSEDC). - The Company undertook to set up a project for the manufacture of 5,00,000 conductor kilometres (CKM) per annum of jelly filled cables. - The Company entered into a technical collaboration agreement with AEG Kabel of West Germany for technical know-how and training of Indian technicians at the collaborator's plant. 1988 - The Company had developed PCM system cable used for transmission of digital signals and supplied higher size cables upto 1600 pairs. The Company had also developed foam skin type cable of size 1800 x 0.4 for the first time in India. - 70 shares subscribed for by the signatories to the Memorandum of Association. 70,99,930 shares were then issued at par out of which

the following shares were reserved and allotted on a firm basis: - (i) 16,96,930 shares to Usha Martin Industries Ltd., its directors, their friends, etc.; - (ii) 18,46,000 shares to BSEDC; - (iii) 10,72,000 shares to AEG - Kabel of West Germany and - (iv) 7,10,000 shares to DEG of West Bermany. Out of the remaining 17,75,000 shares, 3,55,000 shares were reserved for preferential allotment to employees, etc., but only 14,800 shares taken up. The balance 14,20,000 shares along with 3,40,200 shares not taken up by employees, were offered for public subscription during April 1988 (All were taken up). 1989 - During May/June 1989, the company offered 14,20,000 rights equity shares in the prop. 1:5 (All were taken up). Simultaneously, 71,000 No. of equity shares were also offered to the employees on an equitable basis. Only 5,200 shares taken up. Balance 65,800 shares allowed to lapse. 1994 - The Company issued 10,00,000 No. of equity shares of Rs 10 each at a premium of Rs 169 per share on preferential basis to promoters. - During October, the Company issued 32,71,028 GDRs and these representing 32,71,028 No. of equity shares were issued at a price of Rs 335.66 per share. - Usha Martin Telekom Ltd., a joint venture along with Usha Martin Industries Ltd. & Telekom, Malaysia have been providing cellular phone services in Calcutta under the brand name "COMMAND". 1996 - The Company was closely monitoring the development in power sector and was evaluating various options. - Summit Usha Martin Finance Corporation Ltd. (Formerly Usha Martin Finance Corporation Ltd.) became a 50:50 joint venture

between Usha Martin Group of Industries & Sumitomo Corporation of Japan. - Other joint ventures of the company are Usha Siam Steel Industries Ltd., Usha Martin Europe Ltd. and Usha Martin Americas Inc. 1997 - The Company decided to spin-off the Software Division into one of the subsidiaries of the company. - Usha Martin Industries Ltd. was merged with the company. After amalgamation company has become a multi-divisional company, covering the manufacture of pig iron, steel wires and wire rods, wire ropes and jelly-filed cables. - 11,477,334 No. of equity shares issued to the shareholders of erstwhile Usha Martin Industries Ltd. Pursuant to the Scheme of Amalgamation with the Company and 13,56,200 No. of equity shares of Rs 10 each held by erstwhile Usha Martin Industries Ltd. were canacelled due to Amalgamation with the Company. - Ubest a division of the Usha Beltron's Ltd. has signed an agreement with Swiss Telecom PTT to offer Indian cellular operators natel sim card application platform (sicap) software product for immediate implementation. - Usha Beltron Ltd. (UBL) was promoted jointly in 1986 by Usha Martin Industries and Bihar State Electronic development Corporation in technical collaboration with AEG Kabel, Germany to manufacture jelly filled tele-cables (JFTC). - The company will have three major divisions-wire and wire ropes 1998 - Crisil has downgraded the outstanding ratings of Usha Beltron Ltd. (UBL) and also removed them from rating watch. - The Jhawars-promoted wire rope-to-jelly filed cables firm, Usha Beltron Ltd, is set to extend its activities into telecommunications in a big way. - Usha Beltron's telecom foray will include extending activities to different fields of operating, maintaining and providing

telecommunications services of all types and other value-added services and to design, instal and/or erect all types of telecommunication network systems and enter into joint venture agreement with Indian and foreign parties. - Usha Beltron Ltd. of the Jhawars is all set to change its name to Usha Martin Ltd this fiscal, according to sources in the company. This is for the second time, in a span of just one year, that the company is going to change its name. - The company has initiated moves to restructure its international marketing and distribution business. - The Company embarked on creating a new cable manufacturing facility at Silvassa with a capacity of 27 lckm through UM Cables Ltd., a wholly owned subsidiary of the company. 1999 - The company has introduced a voluntary retirement scheme at its cable and wire rope factories in Ranchi from last month. The scheme has been offered to workers and officers who are of and over forty years of age and have completed 10 years of service. - UM Cable Ltd, a wholly-owned subsidiary of Usha Beltron Ltd. belonging to the Rs. 1,000-crore plus Usha Martin Group, is being launched in Silvassa, near Mumbai, to manufacture jelly-filled telecommunication cables. - Usha Beltron Ltd. (UBL), the wire and wire ropes major of the Jhawar group, is setting up a holding company to streamline its overseas distribution network. - Usha Communications Technology, a wholly-owned subsidiary of Usha Beltron Ltd, and Compaq Computer Corporation singed a comprehensive worldwide solution development marketing agreement on May 7 at Portland, Oregon, the US. - UBL recently entered into an agreement with American Express Bank for funding worth $15 million. "The rest of the $10 million will be through equity expansion and bringing in a joint venture partner." - Usha Beltron Limited, the flagship of the city-based Usha Martin Group, is setting up a joint venture with an Australian firm to produce leaded steels.

- Usha Beltron Limited (UBL) of the Calcutta-based Jhawars have acquired 10 per cent equity control in its Thai ropes and wire making joint venture -- Usha Siam Limited. - Umicor, UK, a joint venture between Usha Beltron Ltd. (UBL) and Exim Bank, has acquired EMMC UK, a firm specialising in providing services and solutions for the wire rope industry, for $3.5 million. - While software companies are making a beeline for India, Usha Beltron Ltd. of the Jhawars is setting up a holding company - Usha Communications Technology - for software development in the United Kingdom. - The new company is being set up in collaboration with Entryline Holdings Ltd, a Pentire group company of the UK. - Usha Beltron Limited (UBL), the city-based Jhawar group's flagship, has decided to enter into a 50:50 joint venture with Martin Bright of Australia to set up a Rs 40-crore special steel manufacturing facility in Jamshedpur. - The Usha Beltron Group of the Jhawars has flagged off a major restructuring exercise for its global software activities by initiating the process to set up a new holding company in the United States by January 2000, which is likely to be named UBEST America. 2000 - Usha Beltron is all set to joint the big league of corporates flourishing on growth opportunities inknowledge-based sectors such as infotech and telecom. The company has set up technical training centre - The Company has approved a Scheme of Arrangement proposed to be made between company and Usha Martin Infotech Ltd, (UMIL) and their respective shareholders. - Usha Beltron Ltd, the flagship of the Calcutta-based Jhawars, will issue global depository receipts (GDRs) in a couple of months. - Calcutta-based Usha Beltron has acquired the wire rope business of Brunton Shaw of the UK, a subsidiary of the 180-million Carclo, UK. 2001 - Mr Pradip P. Shah, Director has resigned from the board effective

from 24th January. 2002 -Ties up with Gustav Wolf of Germany to manufacture steel cords in India. -Board approves in setting up of a Direct Reduced Iron (DRI) Plant with the capacity of 100 KT per annum. -Usha Beltron Ltd announces the change in management as follows: 1. Mr Biswajit Choudhuri appointed as a nominee of Unit Trust of India on the Board of the Company in place of Mr S K Saha 2. Mr Dilip Mondal appointed as a nominee of Industrial Development Bank of India on the Board of the Company. -Board approves for the issue and allotment of securites on preferential basis: 1) 53,45,455 equity shares of Rs.5/- each of the company at a price of Rs.33/- per share (inclusive of premium of Rs.28/- per share) being the price which is in accordance with chapter X111 of SEBI (Disclosure and Investor Protection) Guidelines to International Finance Corporation, Washington. 2) 53,45,455 equity shares of Rs.5/- each of the company at a price of Rs.33/- per share (inclusive of premium of Rs.28/- per share) being the price which is in accordance with chapter X111 (Guidelines for preferential issues) of SEBI ( Disclosure and Investor Protection) Guidelines to Promoters, Promoter Group, Directors, their relatives and associates. 3) The BOD have also decided to convene an EGM on July 18, 2002 to consider the above matters. -IFC signs agreement with UBL to invest Rs.120.5cr in the company. -UMIL acquires 30,00,000 shares amounting to 9.45% voting rights on preferential allotment basis. 2003 - DEG financed Rs.50cr to UBL and the debt cost stands at Libor plus 275 basis points with 11 years time span. -Purchases a wire rope plant in Dubai

-Acquisition of 49.55% stake in Usha Martin International Ltd, UK (UMIL) -Ministry of coal alloted captive coal block in Jharkhand having a reserve of more than 30 MN T and contains Grade A & B coal, which would be required by the company for its Sponge Iron (DRI Project) Plant expansion -Mr. T K Banerjee, Nominee of Life Insurance Corporation of India resigned from the Board of Directors of the Company. 2005 -Usha Martin executes a Business Transfer Agreement with JCT 2007 - Usha Martin Ltd has appointed Mr. Suresh Neotia and Mr. Ashok Basu, as additional directors of the Company with effect from May 17, 2007. - The Company has splits its face value from Rs5/- to Rs1/-. 2010 - Usha Martin Limited has appointed Dr. Vijay Sharma and Mr. P. K. Jain as executive Directors on the Board of the Company. - Usha Martin Ltd has has appointed (a) Mr. G N Bajpai as Additional Director [non-executive & independent] with effect from March 18, 2010; and (b) Mr. Nripendra Misra as Additional Director [non-executive & independent] with effect from March 22, 2010. - Usha Martin Ltd has appointed Mr. Jitender Balakrishnan as Additional Director (non-executive & independent) with effect from June 10, 2010.

Board of director
Chairman JhawarDirector Director Director Director Director Director Director Mr. Prashant Mr.Brij K Jhawar Mr. N. J. Jhaveri Mr. U.V. Rao Mr. A. K. Chaudhuri Mr. Suresh Neotia Mr. Ashok Basu Mr. Salil Singhal

Managing Director Jt. Managing Director

Mr. Rajeev Jhawar Dr. P. Bhattacharya

Companies
USSIL :Usha siam steel industries (USSIL) was incorporated in 1980 as a joint venture between Usha martin industries, India and leading industrialists in Thailand - promoted by board of investment (BOI) for production of steel wire and rope. UM Singapore :Established in 2000, is a wholly owned subsidiary of Usha Martin Limited, India. It has been operational as a distribution center for Usha Martin Groups core business of steel wire ropes and related products in South East Asia. It also has distribution set up in Australia & Indonesia. BWWR :Established in 2003, Brunton Wolf Wire Ropes FZCO is a joint venture between Usha Martin Limited of India and Gustav Wolf of Germany.BWWR is the first wire rope factory set up in the middle east, situated in Jebel Ali Free Zone Enterprise (FZE) with an annual capacity of 12,000 MT. The product range includes general engineering rope, elevator rope, crane rope, off-shore application rope, etc.

UM Cables :A wholly owned subsidiary of Usha Martin Limited, located at Silvassa, Western India, manufactures PIJF Copper Telecom cables and Optical Fibre Cables and has an annual capacity of 2.9 MCKM and 35000 RKM respectively.

UMIL :-

Established in 1997, Usha Martin International Limited is a wholly owned subsidiary of Usha Martin Limited, formed to facilitate distribution & marketing of the groups wire & wire rope products in Europe. The company also acquired in 2001 a Nottinghamshire based Wire Rope manufacturing company Brunton Shaw UK with an annual capacity of 6,000 MT. It also specialises in providing services to oil drilling and offshore exploration activities thru its arm European Management & Marine Corporation having offices in Aberdeen (UK),Baku& Tananger(Norway). UM America :A wholly owned subsidiary of Usha Martin Limited, India. It has been operational as a distribution center for Usha Martin Groups core business of steel wire ropes and related products in United States of America. Brunton Shaw America:Established in 2007, Brunton Shaw America is a wholly owned subsidiary of Usha Martin Limited, India having a wire rope manufacturing capacity of 6000 TPA.

NATURE OF THE BUSINESS CARRIED

The business carried on by Usha Martin Company is oligopolistic in nature as there are few producers of wire and wire rope and the price is not a major concern. The industry of wire rope manufacturing has few major players which compete with the limited number of competitors.

VISION, MISSION & QUALITY POLICY

Vision:To be a respected, world class & leadership in business, in quality, productivity, profitability & customer satisfaction. Mission: To be a customer and share holder observed factory. To enhance value to share holders and services to all stake holders. . To develop highly motive team with a sense of satisfaction. To excel as a value driven organization. To create the value in case of quality. To expand its area of its operation& utilize the raw material efficiently. Quality policy: Providing product & services that meet customer expectation . Continual improvement to our quality management system and process. Continues enrichment of the skills and knowledge through training and training.

Compliance to all applicable statutory and regulatory.

Fostering the professional development of our employee. Our suppliers and customers are our partner in progress.

PRODUCTS
Main products of usha martin which the company produce & export. Wire Wire Rope Bright bar Conveyor cord Telecom cable Coil & bar Structural string Prestressing Machinery Telecables

COMPETITORS: Elango industries ltd Electro steel Jindal stainles OCL iron Varun industries Inducto steel ltd Mukand ltd Mahindra ugine steel company ltd Shah Alloys ltd Welcast steel ltd

Competitive position Usha martin ltd Mar 10 J S W Steel Ltd. Mar-10 India ltd. Mar-10

Tata steel ltd. Mar-10

Revenue(Rs mn) EBITDA margins(%) PAT (RS mn) PAT margins (%) Gearing (x) EPS (Rs/ share) PE (x) p/ BV(x) RoCE (%) RoE (%) EV/EBITDA (x)

25,108.8 17.3 1,610.3 6.4 0.6 5.3 12.1 1.2 11.3 12.0 6.6

189.460.2 216 15,532.9 8.2 2.1 90.8 10.6 1.4 11.8 19.9 9.2

410,676.2 1,023,454.4 25.1 68,464.6 16.7 0.5 13.1 12.1 1.8 21.6 21.2 5.8 8.5 -21,208.4 -2.1 7.9 73.9 8.9 1.4 8.2 n.m 12.4

MARKETING NETWORK OF USHA MARTIN Ltd. Major customers : Defense units. Railways. Engineering industries. ESCORTS. BEML units. Automobiles / Foreign industries.

Marketing Strategies adopted to attract and retain Customers: Buyer market. Quick delivery. Better quality

Market Segmentation:

Market segmentation means dividing the market into different segments or sector in Usha Martin Ltd., the market segmentation is on the basis of customer wise and product wise. By customer-wise Defense sectors. Railway sector. Auto and Forging sector. Engineering sector. Trade sector. By product-wise Alloy steel. Promotional Activities: The production is done on the basis of customers orders. Therefore , the organization has not engaging in advertising activity, but as promotional tool. It is giving. Quantity discount Paymant term by credit benfit Qucik delivery Spring steel ScrapsSlag.

Packing and labeling: The steel products are not perishable. So it need not have any proper

packing as compared to consumer products. Binding with wire is enough for packaging the steel products and leveling is done by metal tag and in different colors.

Financial asssesment
Income statement :Y31 Mar (Rs m) Revenue Operation profit Depericiation Interest expenses Other income Profiy before tax Taxes Minorities & other Net profit Balance sheet:Y/e 31 Mar (Rs m) Equity capital Reserves Net worth Minority Debt Debt tax liab (net) Total liabilities Fixed assets Investment Net working capital Inventories Sundry debts Other curr assets Sundary creditors Other curr liab Cash Total assets 08 250 9,424 9,674 118 11,375 1,536 22,702 17,410 4 4,567 7,817 3,234 4,233 10,039 677 721 22,702 09 250 1,15 11,355 168 16,713 1,306 29,541 26,232 4 2,217 6,513 4,264 3,118 10,875 802 1,088 29,541 10 250 12,985 13,236 168 17,315 1,110 31,828 28,904 4 2,635 6,542 3,964 2,919 10,112 678 286 31,828 11 250 16,555 16,806 168 15,405 1,221 33,600 29,154 4 3,421 8,703 5,274 3,789 13,453 891 1,021 33,600 08 23,088 4,276 975 1,006 174 2,468 704 11 1,754 09 29,498 5,137 1,o86 1,422 176 2,806 922 30 1,853 10 27,427 5,916 1,392 1,473 176 3,288 1,061 11 36,491 8,640 1,750 1,310 176 5,756 1,892

2,167

3,864

Cash flow statement :-

y/e 31Mar (Rs m) Profit befor tax Depreciation Tax paid Working capital Op cash flow Cap expenditure Free cash flow Equity raised Debt financing/disposal Dividend paid Other items Net in cash

08 2,468 975 704 135 2,875 4,606 1,731 478 1,745 293 32 231

09 2,806 1,086 922 2,350 5,320 9,909 4,589 122 5,338 294 211 367

10 3,228 1,392 1,061 418 3,141 4,063 922 7 603 294 196 802

11 5,756 1,750 1,892 787 4,827 2,000 2,827 1,910 2394 111 735

Key ratio
y/e 31Mar(Rs m) Growth matrix(%) Revenue growth Op profit growth EBIT growth Net profit growth Profitability ratios(%) OPM EBIT margins Net profit margin RoCE RoA Per share ratio EPS Dividend per share Cash EPS BVPS Valuation ratio(x) P/E P/CEPS P/B EV/EBIDTA 08 17.5 21.8 26.6 27.6 09 27.8 20.1 21.7 5.7 10 (7.0) 15.2 11.2 16.9 11 33.0 46.0 50.3 78.3

18.5 15.1 7.6 16.7 6.0

17.4 14.3 6.3 16.2 5.0

21.6 17.1 7.9 15.3 5.2

23.7 19.4 10.6 21.6 8.5

7.0 1.0 10.9 38.7

7.4 1.0 11.7 45.4

8.7 1.0 14.2 52.9

15.4 1.0 22.4 67.2

10.8 7.0 2.0 6.9

10.3 6.5 1.7 6.7

8.8 5.3 1.4 6.1

4.9 3.4 1.1 3.9

Payout(%) Dividend payout Tax payout Liquidity ratio Debtor days Inventory days Creditor days

16.7 28.5

15.9 32.9

13.6 32.9

7.6 32.9

51 124 159

53 81 135

53 87 135

53 87 135

Leverage ratio Interest coverage Net debt/ equit Net debt/ op profit

3.5 1.1 2.5

3.0 1.4 3.0

3.2 1.3 1.7

5.4 0.9

Component ratios(%) Raw material 47.7 Power & fuel 7.3 Staff cost 7.1 Other op exp 19.4 Production process:Bright bar:-

46.9 6.1 5.8 23.7

43.6 6.6 6.7 21.3

44.8 5.6 5.5 20.4

WIRE ROPE PRODUCTION PROCESS :-

SWOT ANALYSIS

STRENGTH:

 UML ranked under no. 2 in world & in INDIA No. company in manufacturing of wire & wire rope Market share is strong Large distribution network Dealers , branch offices, warehouse is connected with internet in all over INDIA UML has become brand equity in this field , customers first choice by UML Its product is world class in quality & it tested by several authorities The company acquire brunt SHAW ltd , A leading UK wire rope manufactures to source logically advanced rope & access the European market Healthy financial position

WEAKNESS: Machine & tools have become old & obsolete UML has over looked small customer Highly bureaucrat Semi Automatic planned High production cost Demand of elevator ropes has increased due to global infrastructure development Non effective advertising image OPPORTUNITY: Fishing is developing in the southern costel cities Mushrooming of apartment in India & Abroad UMI can increase its profit, its fives more emphasis on direct marketing with customer

 Now present condition reliance has found crude oil resources in Krishna Godavari basin in south, new opportunities present for UML to produce rope UML can develop device for measuring breaking load Competition are not much strong in secondary market

THREATS: Low price of the rivals product are a great threat for UML High production cost Local political instability

INDEX COMPANY PROFILE HISTORY BOARD OF DIRECTORS COMPANIES MISSION, VISION & QUALITY POLICY

PRODUCTS & COMPETITORS MARKET ASSESMENT FINANCIAL ASSESMENT PRODUCTION PROCESS SWOT ANALYSIS

ACKNOWLEDGEMENT I owe a great many thanks to my all faculty mambers who organized for us a industrial visit in usha martin limited. My deepest thank to Pro Tapash ghosal sir, Pragyan mam, Nagapavan sir, Mahendra sir, Harsad sir and Silpi mam for guiding us and correcting the project.

PREFACE
Industrial visit is essential to get the practical orentationof the therotical knowledge and analysis of the business realities at the corporate level. This one day visit made us understand the production process of rope wire and working culture. The industrial visit in this reputed company had been challenging and exciting experience which brought us closer to the business organization.