Directors Report

Year End : Mar '07

The Board of Directors of the Company takes pleasure in presenting

twenty first annual report and audited accounts of your company for the
financial year ended 31st March 2007.
Financial Results
(Rs. in Crs.
Stand Alone
31 March, 31 March,
2007
2006
Gross Sales including inter
company/division sales and
excise duty
Less: Excise Duty
Less : Inter company/ division sales
Net Sales excluding excise duty
and inter company/division sales
Other Income
Net Sales and Other Income
Profit Before Depreciation & Tax
Depreciation
Profit Before Tax
Provision for tax (including deferred tax & FBT)
Profit After Tax
Minority Interest
Profit after Taxation and Minority interest
Profit Brought Forward from previous year
Debenture Redemption Reserve written back
Adjustment arising on Amalgamation
Adjustment on dilution of control
in a subsidiary
Balance Available for Appropriation
Appropriations are made as under:
- Transfer to General Reserve
- Proposed Dividend on Equity Shares
and tax thereon
- Balance Carried Forward to next year
Consolidated
31 March,
2007
2960.39
183.71
811.97
1964.71
16.94
1981.615
276.43
93.51
182.92
44.14
138.78

31 March,
2006
2612.61
170.77
643.30
1798.54
10.73
1809.27
222.43
95.96
126.47
41.05
85.42

2036.65
165.14
462.91

1759.98
145.39
382.80

1408.60
14.33
1422.93
214.68
76.28
138.40
36.92
101.48
41.40

1231.79
9.48
1241.27
176.84
76.10
100.74
35.77
64.97
40.31

142.88

105.28

100.00

50.00

21.96
20.92

13.88
41.40

(1.34)
137.44
45.38
0.50
1.51
0.38
182.82
100.00
21.96
60.86

(1.08)
84.34
22.53
109.26
50.00
13.88
45.38

Dividend
The Board of Directors recommends a dividend at the rate of 75% per
cent on the equity shares of the Company for the year ended 31st March
2007 amounting to Rs. 21.96 Crs., including dividend tax, surcharge
and cess @ 16.995%. All the existing equity shares, including 58,00,000
shares issued on conversion of warrants in terms of shareholders
approval, will be eligible for such dividend.
Review of Operations
During the year under review, your Company achieved net turnover of Rs.
1,408.60 Crs. as against Rs. 1,231.79 Crs. in the previous year, higher
by 14.4%. The gross sales before adjusting inter divisional sales was
Rs. 2,036.65 Crs., registering a growth of 15.7% over the previous
year.
The Company has achieved profit before tax of Rs. 138.40 Crs. as
against Rs. TOO.74 Crs., higher by 37.4% and net profit of Rs. 101.48
Crs., as against Rs. 64.97 Crs. in the previous year, higher by 56.2%.
The collective turnover of the subsidiaries (without inter
company/division sales) stood at Rs. 92.37 Crs., which is higher by
8.3% over the previous year.
The consolidated net turnover (net of excise duty and inter
company/division sales) increased 9.2% to Rs. 1,964.71 Crs. The
consolidated profit before tax and profit after tax moved up by 43.3%
and 62.5% to Rs. 182.92 Crs. and Rs. 137.78 Crs. respectively.
Speciality Steel Business
Steel business achieved a turnover (net of excise duty) of Rs. 1,010.27
Crs. in the year under review as against Rs. 897.82 Crs. in the
previous year, thus registering a growth of 12.5%.
During the year under revew, the Company increased iron ore mining
after commencement of activities in the previous year. The Company has
also taken over a steel rolling plant in Agra, during the year, with an
annual capacity for manufacturing 72,000 tonnes of construction steel.
This division, named as Construction Steel Division, achieved a
turnover of Rs. 41.08 Crs. since acquisition in December 06.
The Company has taken up an expansion of capacity of speciality steel
to 1 Mn. tonnes over the next 3 years in phases. The capex programme

includes setting up of 2nd Mini Blast Furnace, Blooming Mill, 30 MW

Captive Power Plant, 3rd Steei Melt Shop (consisting of Electric Arc
Furnace, Ladle Furnace and Vacuum Degassing), Bioom Caster, 2nd DRI
Plant with related auxiliaries and utility facilities. The
implementation of project is going as per schedule. The project will be
progressively commissioned from middle of FY08 to middle of FY09.
Wire Ropes & Speciality Products Business
The Company achieved a turnover (net of excise duty) of Rs. 785.42 Crs.
in the business of Wire Ropes & Speciality Products in the year under
review against Rs. 657.37 Crs. in the previous year, registering a
growth of 19.5%. Gross profit margin has improved to 1 4.3% from 1
3.2% in the previous year.
Subsidiaries
The wire rope manufacturing plant being set up by Brunton Shaw Americas
Inc., a subsidiary jointly promoted by the Company along with Usha
Martin International Ltd. is under implementation and is expected to
commence production in the first quarter of financial year 2007-08. The
commissioning activity has started from early May 07.
The Statement required under Section 212 of the Companies Act, 1956 in
respect of subsidiaries of the Company is annexed to this Report. The
Company has, vide letter No. 47/205/2007-CL-lli dated 10th May, 2007,
received approval from Ministry of Company Affairs, Government of India
for exemption from annexing the accounts and other documents pertaining
to the subsidiaries, under Section 212(8) of the Companies Act, 1956.
U M Cables Ltd., the only Indian subsidiary company, an unlisted one,
is not a material subsidiary (in terms of Clause 49 of the Listing
Agreement) requiring appointment of an independent director of the
Company, as director of this Company.
Business Outlook
The Company is positive on business outlook in the coming years. With
the completion of expansion of Speciality Steel production and value
added products, and with full integration with Captive iron ore, coal
and power in next 2 years, the Company expects rapid growth in
financial performance in coming years.
The Company has achieved meaningful results from its overseas
investments and it is planning to strengthen its manufacturing,
distribution & service network globally- particularlyin Europe, USA &
South East Asia.
Joint Ventures
During the year under review, the Company has formed following joint
ventures;
- Pengg Usha Martin Wires Pvt. Ltd., with Joh Pengg AG of Austria, for
manuiacturing Oil Tempered and other type of speciality wires, at

Ranchi, The Company holds 40% stake in this venture while the balance
is being held by Joh Pengg AG, Austria.
- CCL Usha Martin Stressing Systems Ltd., with CCL group of UK, for
dealing in posttensioning in building and other civil works. The
Company holds 50%4take in this venture.
- Dove Airlines Pvt. L;o., with Emta group of Koikata, to operate non
scheduled air transport (charter) services. Both the parties hold
equal stake in this venture.
The above joint venvures would commence their operations in due course.
The existing joint venture with M/s Gustav Wolf Seil-und Drahtwerke
GmbH & Co, KG of Germany, namely Gustav Wolf Specialty Cords Ltd., in
which the Company holds 49% equity, has maintained a gross income of
Rs. 0.80 Crs. in the year under review.
Capital
Out of 58,00,000 convertible equity warrants issued to promoter group
companies in October 2005 with the approval of shareholders, 36,25,000
such warrants have been converted into equal number of equity shares of
Rs. 5 each against receipt of Rs. 1 37.70 being 90% of issue price of
Rs. 1 53 per warrant, fixed according to relevant SEBI guidelines. In
the similar manner, the balance warrants have also since been converted
in April, 2007. The equity shares thus issued rank pari passu with
existing equity shares including for dividend declared, if any, during
the year under review and onwards.
The funds raised as above, are meant to be and being utilized for
expansion of steel manufacturing capacity, wire ropes and specialty
products business, for mining activities, meet needs or additional
working capital and/or general corporate purposes.
Your Directors have proposed for subdivision of equity shares of the
Company by reducing face value of the shares from Rs. 5/- each to Re
1/- each. Thus, upon receiving all the necessary approvals, one equity
share of Rs. 5/- each will be subdivided into five equity shares of Re
1/-each.
Your Directors place on record their appreciation for confidence
reposed by the investors in the Company.
TPM& Quality
Wire Ropes and Speciality Products, Division at Ranchi was awarded
2005 Award for TPM Excellence - Firsrt Category by Japan Institute of
Plant Maintenance [JIPM], thus the Company becoming the only indicia
Company in wire and wire rope business to have obtained this
prestigious award. Now this division is gearing up for 2nd level
accredition.
Steel Division of the Company, has already received Excellence and
Consistency awards for tolal productivity maintenance from JIPM.
These awards for the ma|or manufacturing facilities of the Company

firmly recognise the culture of excellence across the organisation,

which have ensured improved results in areas of production,
profitability, quality and overall capacity utilisation, and cost
reduction.
Steel Division and Wire Ropes & Speciality Products Division continue
to have certification for its quality management system being in
accordance with ISO 9001:2000 from BVQI.
Environment
All the manufacturing plants of your Company are running in an
eco-friendly manner and have a focus on workplace health and safety.
Steel Division and Speciality Products Division continue to enjoy
Certification under ISO 14001 Environment Management Systems (EMS)
Standards from Dei Norseke Veritas (DNV), of U.K. The effectiveness of
these systems is evident from reduced oil and water consumption, reuse
of waste oils and water, utilization of iron containing wastes and
improved green cover in steel plant site.
Carbon Credit
The Company has put up Waste Heat Recovery Captive Power Project for
utilising wasre heat generation from DR Plant at UASD, Jamshedpur. The
Company has accumulated 60,989 Carbon Emission Reductions [CERs]. These
CERs have been verified and submitted to UNFCCC for issuance. In
Aprii07, the Company entered into Emission Reduction Purchase
Agreement [CRPAj for sale of these CERs. The Company expects to have
about 50,000 CERs every year from cur rent year onwards,.
The Company has also implemented pro|ectfor utilizing blast furnace gas
in re-heating furnace at Wire Rod Mill in UASD, Jamshedpur. This would
also be accruing about 10,000 CERs on yearly basis.
Human Resources
The Board of Directors expresses its appreciation for sincere efforts
made by the employees of your Company at all levels during the year and
their co-operation in maintaining cordial relations.
Your directors believe and affirm the importance of development of
human resources, which is most valuable and key element in bringing all
round improvement and achieving growth of the business.
The information required under Section 217(2A) of the Companies Act,
1956 read with Companies (Particulars of Employees) Rules, 1975, as
amended, forms part of this Report. However, the report and accounts
are being sent to all the shareholders of the Company excluding the
above information. Those shareholders, who desire to obtain these
particulars, would be provided the same upon receiving such request.
Deposits
At the end of the year, deposits from the public, employees and
shareholders amounted to Rs. 5.77 Crs., including unclaimed deposits of

Rs. 0.59 Crs.

Corporate Governance
Your Company recognizes the importance of good Corporate Governance as
step for building stakeholders confidence, improving investor
protection and enhancing long-term enterprise value.
Your Company has been complying with the requirements of Clause 49 of
the Listing Agreement and has also followed the practice of getting
disclosures from Senior Management personnel relating to any material
financial and commercial transactions where they have any personal
interest, with a potential conflict with the interest of the Company at
large.
A detailed report on Corporate Governance is annexed.

Directors

During the year, Ms. Neeta Mukherjee was nominated as Director on the
Board of the Company by ICICI Bank Ltd. after withdrawal of its
earlier nominee Mr. M J Subbaiah. Your Directors welcome Ms. Mukherjee
on the Board. The nomination of Mr. J K Ray was withdrawn by IDBI Bank
Ltd., from the Board of the Company. Your Directors place on record
their appreciation for the contribution made by Mr. M J Subbaiah and
Mr. J KRay.
Mr. U V Rao, Mr. N J Jhaveri and Mr. A K Chaudhri are retiring by
rotation and being eligible, offer themselves for re-appointment.
Mr. Suresh Neotia and Mr. Ashok Basu have been appointed as additional
Directors on the Board of the Company with effect from 1 7th May, 2007
and they will hold office up to the date of the ensuing Annual General
Meeting.
Directors Responsibility Statement
Pursuant to the requirement under Section 21 7 (2AA) of the Companies
Act, 1956 with respect to Directors Responsibility Statement, it is
hereby confirmed:
(i) That in preparation of the annual accounts for the financial year
ended 31st March, 2007, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) That the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
profit of the Company for the year under review;
(iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1 956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
(iv) That the Directors have prepared the annual accounts for the

financial year ended 31st March 2007 on a going concern basis.

CEO / CFO Certification
The Managing Director and Chief Financial Officer of the Company have
submitted a certificate to the Board as required under Clause 49 of the
Listing Agreement for the year ended 31st March, 2007.
Additional Disclosures
In line with the requirements of the Listing Agreements and the
Accounting Standards issued by the Institute of Chartered Accountants
of India, your company has made additional disclosures in respect of
Consolidated Financial Statements, Related Party Transactions and
Segmental Reporting.
Auditors
The auditors, M/s. Price Waterhouse, Chartered Accountants, retire at
the conclusion of the forthcoming Annual General Meeting and being
eligible, have offered themselves for re-appointment.
Cost Auditors
The Board of Directors appointed M/s S. Gupta & Co., Cost Accountants,
to conduct cost audit for Steel Division, Wire Rope and Speciality
Products Division and Wire & Wire Rope Division - North, for the year
2006-07, and received the approval of the Central Government. The Board
has approved the cost audit reports for the year 2005-06 for the
divisions and the same have been submitted to the Centra Government.
Energy Conservation
As required under Section 217(l)(e) of the Companies Act, 1956, the
details regarding conservation of energy, technology absorption and
foreign exchange earning and outgo are given in the annexure attached
hereto and forming part of this Report.
Corporate Social Responsibility
Your company has strongly believed in its social responsibility being,
an important part of business philosophy. The Company has promoted
Krishi Gram Vikas Kendra (KGVK), as its social arm to take appropriate
initiatives to various areas which affect health, social life and
economic well being of people for a period of over 35 years. Presently,
KGVK reaches out to about one lac households, of tribal people and
weaker sections of society in over 700 villages across 6 districts in
the State of Jharkhand.
KGVK has been taking on various activities in basic health, hygiene and
sanitation, education, women empowerment, community development,
agriculture, integrated watershed development, micro enterprise
development, capacity building and need based training to generate self
employment and sustainable income for weaker sections of society. It
has successfully completed many projects and earned recognition,
appreciation and accolades from wide sections of NGOs, government and

semi government agencies at state, national and international levels.

During the year under review, the Company earned the prestigious TERI
Corporate Social Responsibility Award- 1 st Prize- in recognition of
corporate leadership foe good corporate citizenship and sustainable
initiatives amongst corporates with turnover above Rs. 500 Crs. The
Reduction of Low Birth Weight project of KGVK, which was considered
for the prize, has also been stoled by the Government of Jharkhond as
part of the safes health reforms.
KGVK has been getting active support from, and thorough alliances and
partnerships with, reputed national and international agencies such as
US-AJD, CEDPA, FUTURE, CARE, CAPART, 1CICI Bank, NFI, IRH, Georgetown
University, Washington, India Ccnada Environment Facility, IFC
Washington, World Bank funded SWA- Shakfi, CINI, JTDS, Johns Hopkins
University (Baltimore USA, Sir Ratan Tata Trust, National Foundation of
India, Goal India, Partners in Change, Population Foundation of India,
BAU, ISRO, ICAR Paiandu, NABARD, SIDBI, Lac Research Institute, Som
Dutt Foundation, Govt. of India, Govt. of Jharkhand and local NGOs.
Your Directors express their profound appreciation to oil these
agencies, institutions and government authorities and its employees
for supporting KGVKs initiatives.
Appreciation
Your Directors place on record their appreciation for valuable
co-operation and support of customers, shareholders, investors,
government authorities, financial institutions, banks, partners and
collaborators.
On behalf of the Board of Directors
Kolkata
Date: 17th May, 2007

B K Jhawar
Chairman

11-Feb-2008
Business Profile
Usha Martin (USHAMARTIN) is engaged in the manufacture of specialty steel and value-added
steel products. It was established in 1960 as Usha Martin Black and got its current name in
1983.
The company operates through its various divisions. The ISO 9001 certified wire and wire rope
division with its 100,000 MT/annum manufacturing facilities in Ranchi manufactures a range of
steel wire ropes which find application in oil exploration, construction, elevators, cranes,
mining, fishing, load transportation and general engineering sectors. The ISO 9002 certified
steel division in Jamshedpur manufactures steel long products used in industries like
automobile, railways, general engineering, fasteners, defence and power. The Bangalorebased, ISO 9001 machinery division in technical collaboration with Marshall Richards Barcro
(UK), De-Angeli Industries SPA (Italy), Stolberger Maschinenfabrik (Germany), Hi-Draw
Machinery (UK) and Redaelli Techna Meccanica (Italy) manufactures wire drawing and allied
machineries.
The Usha Ismal division with a manufacturing unit in Ranchi offers hydraulic presses and
accessories for manufacturing mechanically spliced wire rope slings, machines for proof load
testing of wire rope slings, and die-less hand operated hydraulic crimping tools. These
products find wide application in steel plants, oil sector, heavy engineering industry, port
trusts, electricity boards, factories, with electrical contractors, and other sectors. It has
planned enrichment and optimization of mineral resources, enhance the capacity of captive
power generation and value added products at a project cost of INR 21 billion.
With an established pan-India marketing network, the company has distribution centers in the
UK, South Africa, Denmark, USA and Singapore among other countries. The registered office is
located at 2A, Shakespeare Sarani, Kolkata-700071.
Financials

Usha Martin registered a 14.22% growth in net profits to Rs 324.50 million for the quarter ended in
December 2007 from a profit of Rs 284.10 million for the quarter ended in December 2006
Net Sales rose 14.59% to Rs 4026.50 million for the quarter ended December 2007 from Rs
3513.90 million for the quarter ended December 2006.
Total income rose 14.66% to Rs 4043 million for the quarter ended December 2007, from Rs 3526.1
million for the quarter ended December 2006.
The earnings per share (EPS) of the company stood at Rs 1.30 in the quarter ended December
2007 .

Recent Developments
08-FEB-08
Usha Martin Group, is now foraying into the realty and infrastructure business. The group has
floated a new company, Usha Breco Realty (P), headquartered at Mumbai for this initiative. Usha
Breco Realty will focus on joint ventures for property development under a profit or revenue
sharing arrangement. Usha Breco Realty is currently implementing projects worth around Rs 2.5
billion.
07-FEB-08
Usha Martin commenced a joint venture for manufacture of oil tempered wires, Pengg Usha Martin
Wires, at its Ranchi plant.

Future Plans
The company is planning to sell special quality wire ropes for elevators, mining and the
construction sector in China. Meanwhile, the company is planning to invest Rs 21 billion to ramp up
its capacity, develop a coal mine, besides setting up a bright bar plant and a power plant. It also
wants to create infrastructure in its captive mines.
The company would increase its speciality steel capacity to one million tons in the next three years.
A plant would be commissioned at Chennai in one-and-a-half year`s time to produce bright bars
required for manufacturing auto components with a capacity of 30,000 tons per annum.
The company in November 2007 decided to sell the entire equity in its subsidiary company UM
Cables to the Manchester-based B3 Cable Solutions. An MOU to this effect is signed, subject to due
diligence and necessary approvals.
In Brief