The Fire Within...

The Life Force of Usha Martin

A N N U A L R E P O R T 2 0 0 5 - 0 6
Contents
Chairman’s Statement 1

Directors’ Report 2

Management Discussion & Analysis 6

Annexure to Directors’ Report 11

Section 212 14

Corporate Governance 15

Auditor’s Report 22

Balance Sheet 24

Profit and Loss Account 25

Schedules 26

Cash Flow Statement 56

Balance Sheet Abstract 58

Section 212 (8) 59

Consolidated Financial Statements 60

Global Facilities 86
Chairman’s Radical is Magical
“Good isn’t good enough,” observes Shri B K Jhawar, Chairman,

Statement Usha Martin

Turning a critical eye towards the past, I acknowledge that we have come
a long way… but I also concede that it should not have taken quite so long.
We ought to have been more focused on what we chose to do. In the good
old days, the industry was encircled by licenses, permits, hurdles, controls
and shackles and we felt the excitement of crossing a hurdle, breaking a
shackle or getting a permit. But fortunately, times are changing and things
have changed.

Today, when we plan for the future, I appreciate the positive, aggressive
attitude of the management team and I feel confident that looking back, 10
years from now, will be more satisfying.

The change in philosophy towards growth is palpable. Managers today are

not content with what they have achieved and this sense of continuous
dissatisfaction drives the Usha Martin management to reach new heights.

So where do we go in the next 5 years?

In 45 years, we have reached the current level of performance – whatever
be the form we choose to measure it in, be it production in MT or sales
turnover in crores.

Are we aiming for the same rate of growth or something slightly better?
Neither will do in the present day competitive market and liberalized global
environment.

Radical Growth is what Usha Martin must now aim for. In Late Professor
BK Jhawar Sumantra Ghoshal’s words – “radical growth should always be understood
Chairman
uniformly by everybody in the organization.”
For us, it means… in five years,
• becoming a million tonne speciality steel company,
• becoming the global leader in wire rope
• leading the cable industries in the telecom sector in India
• earning revenues which will be more than double on a consolidated basis
with every division and subsidiary competing to outperform each other….

And the magical mantra is: Change.

Even in traditional manufacturing, Usha Martin will cultivate the work culture of
the IT industry, where hardware and software become obsolete in 3 years.
 1

We too will continuously change our hardware, software and our strategic management practices. Once upon a time, a vision, once stated,
could not be changed; mission statements were rigid laws. But today, visions can change and missions can be rewritten as our knowledge base
expands with time.
You can walk much longer with a partner than you can alone. I am happy that we have done well in our partnership with Gustav Wolf for
conveyor cord and Dubai wire rope plant and have started implementing our Joint Venture OT Wire Project with Joh.Pengg. Austria.
Since growth needs to be driven both by organic and inorganic instruments, it is reassuring to note how efficiently and seamlessly the newly-
acquired JCT division has been integrated within the Usha Martin family. And over the next few years, I definitely expect similar acquisitions,
both in India and abroad, on value added steel products.
Knowledge Integration is crucial for a multi product/ multi location company like Usha Martin, with 5 plants in India, 4 plants abroad and
distribution companies across the globe. At every location, we have reached excellence in some pockets of know how, practices and skills.
We need to integrate these skills, knowledge, and practices across the length and breadth of the company..
Skills, knowledge, talent in individual pockets are like uncut diamonds. The cutting, polishing, designing and setting of these diamonds create
the most beautiful ornament. This process of converting the unremarkable uncut rough diamond, into a dazzling ornament of the highest value,
is the process of integration- admittedly, the real value is still there in those stones.
Metal maker to value creator – Diversify product portfolio.
A time comes when excessive affinity to a particular product becomes counter-productive. We all love our wire and wire rope… and, this passion
has taken us to an enviable position in the wire rope world.
Now, it is time to steer the organization towards an important value added steel product business, focusing on other logical speciality steel
based critical mass product business.
Our journey starts and ends at the doorstep of the customer. Our entire business strategy should revolve around fulfilling the needs and
demands of the customer more efficiently than our competitors.
Finally, we must be true to our corporate social responsibility.
As a corporate entity, we manage our business to create value
for the stakeholders. For sustainability, we need to understand
our role as a corporate citizen and our influence on the society
around us. Our responsiveness to the society should be a model
for other industries.
I take this opportunity to share some good news – Usha Martin
has been honoured with the TERI Corporate Award for
Environmental Excellence and Corporate Social Responsibility,
for the year 2004-05. I received the award from the President
of India Dr. A. P. J. Kalam on 26th June, 2006 at New Delhi.
And on that note of optimism, I would like to reaffirm the need
to watch the business like a hawk, keeping an equal vigil on
opportunities available in the global market place, so that no potential for growth may escape us.
Because ultimately, only radical thinking can lead to magical growth.
2

REPORT OF THE BOARD OF DIRECTORS

Dear Shareholders,

The Board of Directors of the Company takes pleasure in presenting the twentieth annual report and audited accounts of your
Company for the financial year ended 31st March 2006.

Financial Results
(Rs. in Million)
Stand Alone Consolidated

31 March, 2006 31 March, 2005 31 March, 2006 31 March, 2005

Gross Sales including inter 17599.9 15699.2 26126.1 22560.7

company/division sales and
excise duty
Less: Excise Duty 1419.8 807.1 1673.5 982.2
Less : Inter company/ division sales 3828.0 2993.4 6433.0 6075.9
Net Sales excluding excise duty 12352.1 11898.7 18019.6 15502.6
and inter company/division sales
Other Income 94.8 9.8 107.3 25.8
Net Sales and Other Income 12446.9 11908.5 18126.9 15528.4
Profit Before Depreciation & Tax 1768.4 1284.8 2224.3 1579.8
Depreciation 761.0 702.0 959.6 873.0
Profit Before Tax 1007.4 582.8 1264.7 706.8
Provision for tax 357.7 174.0 410.5 203.1
(including deferred tax & FBT)
Profit After Tax 649.7 408.8 854.2 503.7
Minority Interest - (10.8) (5.4)
Share of earning/[loss] from Associates - - - 2.5
Profit after Taxation and Minority interest - - 843.4 500.8
Profit Brought Forward from previous year 403.1 357.7 225.3 92.9
Debenture redemption reserve written back - - 5.0 -
Adjustment arising on Amalgamation - - 15.1 -
Adjustment on dilution of control - - 3.8 -
in a subsidiary
Balance Available for Appropriation 1052.8 766.5 1073.7 593.7
Appropriations are made as under:
- Debenture Redemption Reserve - - - 5.0
- General Reserve 500.0 300.0 500.0 300.0
- Proposed Dividend on Equity 138.8 63.4 138.8 63.4
Shares and tax thereon
- Balance Carried Forward to next year 414.0 403.1 453.6 225.3

Dividend
The Board of Directors recommends a dividend at the rate of
55% per cent on the equity shares of the Company for the
year ended 31st March 2006 amounting to Rs. 139 Mn.,
including dividend tax, surcharge and cess @14.025%.
Earnings and Dividend
18.00
16.00
14.00
12.00
10.00
30%
Rs per Share
8.00
6.00 15%
11.04
4.00 10% 10%
2.00 4.19
2.17 2.58
0.00
FY02 FY03 FY04 FY05
Basic EPS
Review of Operations
During the year under review your Company achieved net
turnover of Rs. 12352 Mn. as against Rs. 11,899 Mn. in the
previous year, higher by 3.8%. The level of activity before
adjusting inter divisional sales was Rs. 17054 Mn., registering
a growth of 10.8% over the previous year.
The Company has achieved profit before tax of Rs. 1007 Mn.
as against Rs. 583 Mn., higher by 72.8% and net profit of
Rs. 650 Mn., as against Rs. 409 Mn. in the previous year, higher
by 58.9%.
The collective turnover of the subsidiaries (without inter
company/division sales) stood at Rs.8526 Mn.
The consolidated net turnover (net of excise duty and inter
company/division sales) increased 16.2% to Rs. 18020 Mn.
and consolidated profit before tax moved up by 78.9% to
Rs. 1265 Mn.
Steel Business
Steel business achieved a turnover (net of excise duty) of
Rs.9012 Mn in the year under review as against Rs.9067 Mn
in the previous year. The gross profit margin has, however,
increased to 21.3% during the year under review compared
to 18.9% in the previous year.
During the year under review, the Company commenced iron
ore mining activities in State of Jharkhand. The Railway Siding,
40 TPH Boiler and 3rd Laddle Furnace were put to commercial
use. The benefits of these would be available in the
coming years.
Wire Ropes & Speciality Products Business
The Company achieved a turnover (net of excise duty) of Rs.
6,496 Mn. in the business of Wire Ropes & Speciality Products
in the year under review against Rs. 5,289 Mn in the previous
year, registering a growth of 22.8%. Gross profit margin was
13.4% against 13.3% in the previous year.
During the year, the Company acquired wire and wire rope
division of JCT Limited at Village Chhohal, District Hoshiarpur
DIRECTORS’ REPORT 3
in State of Punjab. This division, named as Wire & Wire Rope
Division [North], achieved a net turnover of Rs.1053 Mn. since
it commenced operations on 1st June, 2005.
Subsidiaries
Usha Martin Americas Inc., Brunton Wolf Wire Ropes FZCO
and UMICOR Africa Pty Limited, which were subsidiaries of
55%
60%
Usha Martin International Limited [UMIL], a wholly owned
50% subsidiary of the Company, have become direct subsidiaries
16.20
40%
of the Company with effect from 1st October, 2005. At the
same time, Brunton Shaw UK Limited (BSUK), a wholly owned
30%
subsidiary of the Company, was made a wholly owned
20% subsidiary of UMIL, and business of BSUK has been transferred
10%
to UMUK, another subsidiary of UMIL. These changes have
been done to ensure greater focus on the performance and
FY06
0%
growth of the businesses in the respective geographical regions.
Dividend
The Company is setting up wire rope manufacturing facility
in the United States of America under Brunton Shaw Americas
Inc., a new subsidiary company jointly promoted by the
Company along with UMIL. This company is expected to
commence production in the financial year 2006-07.
With the approval of the shareholders in the court convened
extra ordinary general meeting held on 1st March, 2006, and
Hon’ble High Court of Calcutta, Usha Martin Holdings Limited,
a wholly owned subsidiary of the Company, has been merged
with the Company with effect from 1st April, 2005. The annual
accounts of the Company have been prepared accordingly.
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. 47/98/2006-
CL-III dated April 3, 2006, 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 unlisted subsidiary company,
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.
Raising of Capital
During the year under review, the Company has successfully
raised US $ 25 Mn by issue of 7,223,763 Global Depository
Receipts [GDRs], each priced at Rs. 156 and representing 1
equity share of Rs.5/- of the Company. The GDRs have been
listed at Luxembourg Stock Exchange along with GDRs
outstanding out of earlier issues.
With the approval of the shareholders in the Extra Ordinary
General Meeting held on 28th September, 2005, the Company
has also issued 5,800,000 convertible equity warrants to
promoter group companies, as per prevailing SEBI guidelines.
The warrants, priced at Rs. 153/- each, were subscribed with
an advance payment of 10% and are convertible into equal
number of equity shares of Rs. 5 each, in phases, by 9th April,
2007 at the option of warrant holders.
4

Profit margins improving investor protection and enhancing long-term

9.0%

8.0%
enterprise value. A detailed report on Corporate Governance
7.0%
8.2% is annexed.
6.0% Your Company has implemented revised Clause 49 of the
5.0%
4.9%
Listing Agreement from 1st January, 2006.
4.0%

3.0%
5.3% During the year, the practice has been introduced for Senior
2.9%
2.0%
3.4% Management personnel to make disclosures to the Board of
1.0% 1.0%
1.8%
2.0% Directors relating to any material financial and commercial
0.0% 0.8%
1.1%
transactions where they have any personal interest, with a
FY02 FY02 FY04 FY05 FY06
PBT Margin net Profite Margin potential conflict with the interest of the Company at large.

CEO / CFO Certification

The funds raised as above, are proposed to be utilized for
expansion of steel manufacturing capacity and wire ropes and
speciality products business, for mining activities, meet needs
for additional working capital and/or general corporate
purposes.
Your Directors place on record their appreciation for confidence
reposed by the investors in the Company and state that the
issue proceeds are being utilized for the declared purposes.
TPM & Quality
During the year under review, Wire Ropes and Speciality
Products Division has been awarded “2005 Award for TPM
Excellence – First Category” by Japan Institute of Plant
Maintenance [JIPM], thus the Company becoming the only
Indian Company in wire and wire rope business to have
obtained this prestigious award.
Steel Division of the Company, which received Excellence
Award for total productive maintenance from JIPM earlier, has
further received “Consistency Award” from JIPM during the
year.
These awards for the major manufacturing facilities of the
Company firmly recognise the culture and attitude 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 Det 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.
Corporate Governance
Your Company recognizes the importance of good Corporate
Governance as step for building stakeholders’ confidence,
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, 2006.
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.
Deposits
At the end of the year, deposits from the public, employees
and shareholders amounted to Rs. 167.0 Mn. including
unclaimed deposits of Rs. 10 Mn.
Directors
Mr. R K Agrawal resigned from Board during the year under
review. Your Directors place on record their appreciation for
his contribution.
Mr. J K Ray was nominated as Director on the Board of the
Company by IDBI Bank after withdrawal of its earlier nominee,
Mr. D Mandal. Your Directors welcome Mr. Ray on the Board
and place on record their appreciation for the contribution
made by Mr. Mandal.
Mr. B K Jhawar and Mr. P Jhawar are retiring by rotation and
being eligible, offer themselves for re-appointment.
Directors’ Responsibility Statement
Pursuant to the requirement under Section 217 (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, 2006, 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, 1956 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 2006 on a
going concern basis.
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, for the year 2005-06,
and received the approval of the Central Government. The
Board has approved the cost audit reports for the year 2004-
05 for these divisions and the same have been submitted to
the Central Government.
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.
Energy Conservation
As required under Section 217(1)(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 continues to have strong commitment towards
corporate social responsibility and considers the same as
important feature of business philosophy.
The Krishi Gram Vikas Kendra (KGVK), which was promoted
DIRECTORS’ REPORT 5
by your Company, as its social initiative wing, is a recognized
NGO having its’ activities in basic health, hygiene and
sanitation, education, women empowerment, integrated
watershed development and need based training to generate
self employment for weaker sections of society in the State of
Jharkhand.
In addition to its’ regular activities as above, KGVK has taken
further following initiatives:
l Setting up Centre for Business Initiatives at Grass Root
(C-BIG) in partnership with IFC- to impart enterprise
development and vocational skill training for rural
poor and marginalized people,
l setting up Trade Facilitation Centre (TFC) in partnership
with IFC- to improve market access to marginalized
small holders, and
l Development of Village Resource Centers (VRCs) in
partnership with ISRO. VRC will become single window
delivery mechanism for tele medicine, tele education,
natural resource data, agriculture advisories, land &
water resources advisories, interactive farmers’
advisories, e-governance services and weather
information.
Government of Jharkhand has recognized the efforts of KGVK
in health and has joined hands with KGVK to strengthen its
health service delivery activities with special emphasis to
Reproductive and Child Health (RCH). It has also recognized
KGVK as a Regional Resource Center (RCC) for all health
related training.
KGVK has alliances and partnerships with reputed national
and inter national agencies such as US-AID, CEDPA, FUTURE,
CARE, CAPART, ICICI Bank, NFI, IRH, Georgetown University,
Washington, India Canada Environment Facility, IFC
Washington, World Bank funded SWA-Shakti, CINI, JTDS,
Johns Hopkins University (Baltimore- USA), Goal India, BAU,
ISRO, ICAR Palandu, Lac Research Institute, Govt. of India,
Govt. of Jharkhand and local NGOs.
Your Directors express their appreciation to all these agencies,
institutions and government authorities and its’ employees for
supporting KGVK’s initiatives.
Appreciation
Your Directors place on record their appreciation for valuable
co-operation and support of customers, shareholders, investors,
government authorities, financial institutions, banks, IFC
(Washington) and collaborators.
On behalf of the Board of Directors
Kolkata P. Jhawar R. Jhawar
Date: 6th May 2006 Vice Chairman Managing Director
6

MANAGEMENT DISCUSSION AND ANALYSIS

The Company continues its long term strategy of enhancing
sustained competitiveness to achieve global leadership by
reducing operational cost and increasing margin. By following
this and as a result of various steps having been taken to
achieve control over key inputs to insulate from volatility of
availability, prices and quality; enhancing value creation
through improved product mix; and satisfying customers needs
through R&D, quality, greater geographical presence and
prompt delivery, the Company has completed yet another
satisfying year on account of performance and growth.
Consolidated Gross Level of Activities
30,000
25,000
22,655
20,000 15,730
14,356
Rs in Million
products. However, the gross profit margin has improved to
21.3% against 18.9% in the previous year.
Steel sector has witnessed softer prices of finished products
in general.
The export turnover of steel business reduced to Rs.1010 Mn.
in the year under review from Rs.2087 Mn. largely to meet
requirement of domestic customers.
The Company has commenced its iron ore mining activities
in the State of Jharkhand during the year. It is expected that
benefits of iron ore mining would be coming from the current
year. The Company expects to meet its full requirement of iron
26,150
ore through captive supplies in the year 06-07.
In steel business, the Company has achieved a fair level of
value integration with iron ore mining activities and the same
will get further strengthened with commencement of coal

12,841
15,000
10,000
5,000
0
FY02 FY03 FY04
On stand alone basis, the Company achieved a net turnover
of Rs. 12352 Mn., a growth of 3.8% over the previous year.
The gross profit, profit before tax and profit after tax, however,
have significantly improved by 25.6%, 72.8% and 58.9%
respectively over those of the previous year. The gross profit,
profit before tax and profit after tax recorded in the year by
the Company are Rs.2499 Mn., Rs.1007 Mn. and Rs.650 Mn.
respectively. Gross margin for the Company as a whole has
increased from 16.7% to 20.2% during the year.
The Company has achieved significant growth in gross level
of activities (i.e. including inter division sales) of Rs.17054
Mn., a growth of 10.8% over the previous year.
On consolidated basis, the Company and its’ subsidiaries
have achieved a net turnover level, profit before tax and profit
after tax of Rs.18020 Mn., Rs.1265 Mn. and Rs.843 Mn.
respectively. These figures are significantly higher over those
of the previous year by 16.2%, 78.9% and 68.4% respectively.
Gross level of activities (i.e including inter company/inter
division transfers) stood at Rs.26126 Mn., which is higher by
15.8% over the previous year.
Steel Business
The Steel business accounts for 57.6% of gross activity level
of the Company and 47.6% of reported turnover.
This business achieved a net turnover of Rs. 9,012 Mn. in the
year under review, as against Rs. 9,067 Mn. in the previous
year, marginally lower due to reduced prices of finished
mining activity, which is expected to take place by end of the
fourth quarter of 06-07.
The Company has successfully commissioned railway siding,
40 TPH boiler and 3rd ladle furnace, the benefits of which
FY05 FY06
are expected in the subsequent years.
For growth of steel business, the Company has undertaken
capex programme to set up 2nd Mini Blast Furnace, Bar Mill,
30 MW Captive Power Plant and Bloom Caster; up grade DRI
plant; and enhance and strengthen the auxiliaries, utilities
and support facilities. The implementation of these projects
is progressing satisfactorily.
Wire Ropes & Speciality Products Business
The Wire Ropes & Speciality Products business accounted for
41.5% of gross activity level and 51.4% of reported turnover
of the Company.
This business achieved turnover of Rs.6496 Mn. as against
Rs. 5289 Mn. in the previous year, registering a growth of
22.8% over the previous year. The gross profit margin was
13.4% against 13.3%.
The export turnover of this business was Rs.2341 Mn during
the year under review as against Rs.2417 Mn in the previous
year.
During the year under review, the Company acquired wire
and wire rope division of JCT Limited at Village Chhohal,
District Hoshiarpur, in the State of Punjab. This division named
as Wire & Wire Ropes Division [North] achieved a net turnover
st
of Rs. 1053 Mn. since it commenced operations on 1 June,
2005. The acquisition of these facilities, resulting into higher
level of value addition capacity in the business of wires, wire
ropes and speciality products, is expected to ensure higher
benefits in the subsequent years.

During the year under review, Wire Rope & Speciality Product
Divison at Ranchi has
a) developed fully galvanised plastic coated LRPC strand for
construction industry where there is huge demand and
only few manufacturers have capability to manufacture
this product,
b) improved average performance of plastic valley filled
‘powerform’ ropes to 600 hrs as against 350 hrs of
normal ropes,
c) developed elevator cord for cable sheathed belt, demand
of which from elevator industry is likely to increase,
d) improved the life of mono cable aerial haulage ropes by
20-25%,
e) successfully supplied anchor mooring ropes to Delmar,
USA, one of the largest oil exploration companies in the
world, and
f) developed premier fishing rope for domestic and
international markets with substantially higher life.
This division has been awarded “2005 Award for TPM Excellence
– First Category” by Japan Institute of Plant Maintenance
[JIPM], thereby the Company becoming the only Company in
wire and wire rope business in India to have obtained this
prestigious award.
Cable Business
The cable business under UM Cables Limited, a wholly owned
subsidiary of the Company, achieved a gross turnover of
Rs. 2124 Mn. during the year under review, which is higher
by 40.7% over Rs. 1509 Mn. in the previous year. Profit before
tax increased significantly to Rs. 51 Mn. compared to Rs. 18
Mn. in the previous year.
UM Cables strengthened its position in domestic export markets.
The continued focus of diversified customer base, which has
enabled this business to perform better, is expected to help in
further improvement in subsequent years.
International Business
Gross level of activities of overseas subsidiaries increased by
19.6% at Rs.6402 Mn. as against Rs. 5352 Mn in the previous
year. The international business accounted for 24.5% of
consolidated gross level of activity of the Company.
The Company has presence in international markets through
manufacturing and distribution subsidiaries located in different
parts of the world. With a view to achieve higher growth in
the business and focussed presence in respective geographic
regions, the following changes were made in the ownership
structure of the subsidiaries:
DIRECTORS’ REPORT 7
l Usha Martin Americas Inc., Brunton Wolf Wire Ropes FZCo
and UMICOR Africa Pty Limited, which have business
outside United Kingdom, have become direct subsidiaries
of the Company with effect from 1st October, 2005.
l Brunton Shaw UK Limited, which, has manufacturing
operations in United Kingdom and was wholly owned
subsidiary of the Company until 30th September, 2005,
has become direct subsidiary of UMIL.
Usha Martin International Limited [UMIL]:
Apart from the changes as above, the businesses of European
Management & Marine Corporation [EMMC], EMM Caspian
Limited, EMM Kazakhstan Limited and Brunton Shaw UK Ltd.,
wholly owned subsidiaries of UMIL, have been transferred to
Usha Martin UK Limited [UMUK], another wholly owned
subsidiary of UMIL, with effect from 1st October, 2005. With
these changes, UMUK is now having total focus in UK market
with the facilities ranging from manufacturing, distribution
and providing end use solutions to wire rope customers in
and around United Kingdom.
Usha Martin Scandinavia A/S, a wholly owned subsidiary of
UMIL, operating as distribution company in Scandinavian
market, was sold with effect from 1st February, 2006.
Consolidated turnover of UMIL during the year was GBP 37.3
Mn. against GBP 34.3 Mn. in the previous year registering a
growth of 8.7%. UMIL reported consolidated net profit of GBP
2.7 Mn. against GBP 1.0 Mn. in the previous year.
Consolidated Profits
1.400
1.200
PAT
1.000
Rs in Million
800 PBT
600
400
200
0
FY02 FY03 PBT
FY04
FY05 FY06 PAT
The Company and UMIL have jointly promoted Brunton Shaw
Americas Inc. [BSA] to set up wire rope manufacturing facilities
in United States of America. BSA is expected to commence
production in the current financial year.
During the year, the Company has invested GBP 1.15 Mn in
equity of UMIL.
Usha Martin Americas Inc [UMAI]:
During the year under review, UMAI achieved a turnover and
profit after tax of US $ 20.3 Mn. and US $ 0.4 Mn against
US $ 15.6 Mn and US $ 0.3 Mn in the previous year, registering
a growth of 30.1% and 33.3% respectively.
8
With effect from October 1, 2005, UMAI became direct wholly
owned subsidiary of the Company.
With the commencement of manufacturing activities by BSA,
UMAI along with BSA would have greater reach and product
range for US and nearby markets. This is expected to yield
long term benefits to the group’s global wire rope business.
Brunton Wolf Wire Ropes FZCo [BWWR]:
During the year under review, BWWR achieved turnover and
profit after tax of AED 39.9 Mn and AED 1.9 Mn as against
AED 31.1 Mn and AED 1.4 Mn in the previous year, thus
achieving a growth of 28.2% and 35.7% respectively.
With effect from 1st October, 2005, BWWR has become direct
subsidiary of the Company, which holds 60% in its equity with
balance 40% being held by M/s. Gustav Wolf of Germany
and its associates.
Usha Siam Steel Industries Public Company Limited [USSIL]:
Usha Siam Steel Industries Public Company Ltd [USSIL] achieved
a turnover of Thai Baht (Baht) 1321 Mn during the year under
review against Baht 1301 Mn in the previous year, and reported
a net profit of Baht 15 Mn (after extra ordinary charge of Baht
11 Mn. on account of value of fixed assets) against Baht 18
Mn. in the previous year. The management expects USSIL to
maintain improved performance in the subsequent years.
Global Business Profile-FY06
7%
8%
9%
37%
Steel Wire & Wire Rope
Telecommunication Cable Wire Rope Services
During the year under review, the Company invested Baht 42
Mn. in equity of USSIL. M/s. Tessac Corporation of Japan,
which has presence in the wire rope market in Japan has
taken 2.15% equity in USSIL. This would enable USSIL to
increase its market share and technical access in the field of
wire rope products.
Usha Martin Singapore Pte Limited [UMSPL]:
Usha Martin Singapore Pte Ltd. [UMSPL] continued its growth
trend in the year under review. UMSPL achieved a consolidated
turnover of S$ 23.7 Mn against S$ 19.3 Mn. in the previous
year and maintained a net profit of S$ 0.7 Mn. This company
expects to maintain turnover and profitability levels, though
with the increased competition in the local market, and achieve
higher presence in Australian market through its’ wholly owned
subsidiary, viz. Usha Martin Australia Pte Limited(UMAL). UMAL
has achieved a moderate turnover of A$ 0.5 Mn. in very first
year of distribution operations.
Financial Discussion
In pursuance of the approval of shareholders in the Extra
Ordinary General Meeting held on 28th September, 2005 the
Company successfully placed 7,223,763 Global Depository
Receipts [GDRs], amounting to US $ 25.0 Mn. to international
investors. Each GDR, representing one equity share of Rs. 5,
was priced at US $ 3.45 equivalent to Rs. 156. The GDRs
have been listed in Luxembourg Stock Exchange.
The Company also issued 5,800,000 convertible equity
warrants to promoter group companies on preferential basis,
as per prevailing SEBI guidelines. The warrants, priced at
Rs.153/- each, have been subscribed with an advance payment
of 10% and are convertible into equal number of equity shares
of Rs.5/- each at the option of warrant holders, in phases,
within 18 months from date of allotment. Upon full conversion
into equity shares, the issue proceeds would amount to
Rs.887 Mn.
The funds raised through issue of GDRs and balance funds
to be received upon conversion of equity warrants would be
utilised in capex programme for expansion of steel
manufacturing capacity and other facilities, strengthening and
expansion of wire ropes and speciality products business,
commencement of iron ore and coal mines, working capital
requirement and other general corporate purposes.
39%
During the year under review, the Company sold its entire
stake of 1,200,000 equity shares in Usha Martin Ventures Ltd.
at a gain of Rs. 8 Mn.
Usha Martin Holdings Limited, a wholly owned subsidiary of
the Company and in the business of investment and financial
activities, has been merged with the Company with effect from
Wire Rope Distribution
1st April, 2005 with approval of the shareholders in court
convened Extra Ordinary General Meeting held on 1st March,
2006 and approval of the Hon’ble High Court of Calcutta.
By continuing steps to reduce cost of borrowings including
repayment of high cost loans, the Company could maintain
its overall cost of borrowings at 7.00% as on 31st March,
2006.
The long term loans raised and repaid during the year under
review amounted to Rs. 1590 Mn. (including Rs.790 Mn. for
refinancing of existing high cost loan) and Rs. 780 Mn.
respectively. As on 31st March, 2006, the Company had
outstanding long term loans of Rs. 6119 Mn. and short term
borrowings of Rs. 756 Mn. (including utilisation of fund based
limits granted by banks).
The Company is enjoying excellent relationship with and high
level of comfort from all its lenders. The Company has made

all payments of loan and interest to banks and financial
institutions within the respective due dates and no delays have
taken place.
The debt equity ratio of the Company improved significantly
to 1.16 as on 31st March, 2006 as against 1.86 as on 31st
March, 2005.
2.60 2.45
2.40
2.20 2.07 2.09
2.00
1.86
1.80
1.60
1.40
1.16
1.20
1.00
FY02 FY03 FY04 FY05 FY06
Dfbt Equity Ratio
The Company is having highest credit rating of PR1+ [indicating
strong capacity for timely payment of short term debt obligation
and carry lowest credit risk] from Credit Analysis & Research
Limited [CARE] for raising short term funds remaining
outstanding at any point of time upto Rs. 1500 Mn.
The Company has stopped taking public fixed deposits with
effect from 27th July, 2005. There have not been any defaults
in repayment and servicing to depositors. The total of such
deposits accepted (including renewals) and repaid during the
year amounted to Rs. 11 Mn. and Rs. 147 Mn. respectively.
Investors’ Services
The presentation was made to investors in February’06 and
placed on the Company’s web site - www.ushamartin.com
During the year, the Company deposited Rs. 0.5 Mn. with the
Investors Education & Protection Fund constituted by the Central
Government, being matured dues remaining unpaid for a
period of 7 years on account of dividend, debentures and
fixed deposits including interest thereon.
TPM & Quality
In view of competitive edge and business potential it has, the
Company is positioning itself strategically and systematically
to serve customers, who are more demanding in terms of
quality and service, and moving towards higher value addition
and improved product mix.
Internal Control Systems & Risk Management
The Company has internal audit and risk management
department, manned by qualified and competent personnel,
and adequate internal control systems, which safeguard assets
from possible losses and unauthorised use, and ensure the
transactions being authorised, recorded and reported properly.
During the year under review, services of external firms of
chartered accountants have also been availed to help Internal
Audit & Risk Management Department of the Company in risk
DIRECTORS’ REPORT 9
assessment and minimisation procedures, risk management
framework and improving internal control systems.
Human Resources Development
In house teams are conducting the programmes with external
faculties in areas of Management Development (for executives
and officers), Domestic Management (for employees’ spouses)
and Attitudinal Development (for officers, staff and workmen).
Corporate Social Responsibility
Your Company continues to have strong commitment towards
corporate social responsibility and considers the same as an
integral part of its business philosophy. It also believes that
being sensitive to eco friendly environment, the community
needs are to be met by their sustainable income generation
activities through natural resource management, health,
hygiene and sanitation, education, women empowerment and
capacity building. Your company through its social initiative
wing acts as a catalyst for these objectives.
The Krishi Gram Vikas Kendra (KGVK), which was promoted
by your Company, as its social initiative wing, is a recognized
NGO having its’ activities in basic health, hygiene and
sanitation, education, women empowerment, integrated
watershed development and need based training to generate
self employment for weaker sections of society in the
Chhotanagpur belt of Jharkhand. KGVK has been implementing
projects with special focus on:
l Integrated Watershed & Wasteland Development, in an
area of about 20000 hectares in Hazaribag, Saraikela,
Kharsuan, Ranchi and West Singhbhum districts in the
state of Jharkhand,
l Reproductive and Child Health,
l Reduction of Low Birth Weight Incidence,
l Awareness on HIV-AIDS and Sensitization of work force
towards HIV/AIDS infected co-workers,
l Awareness on natural family planning methods (standard
days method),
l Integrated Nutrition and Health,
l Adolescent Health Education,
l Women Empowerment, and
l Quality Primary Education for all.
In addition to its’ regualar activities as above, KGVK has taken
further following initiatives during the year:
l setting up Centre for Business Initiatives at Grass Root (C-
BIG) in partnership with IFC- to impart enterprise
development and vocational skill training for rural poor
and marginalized people,
l setting up Trade Facilitation Centre (TFC) in partnership
with IFC- to improve market access to marginalized small
holders, and
10
l Development of Village Resource Centres (VRCs) in
partnership with ISRO. VRC will become single window
delivery mechanism for tele medicine, tele education,
natural resource data, agriculture advisories, land & water
resources advisories, interactive farmers’ advisories, e-
governance services and weather information.
Your Company also encourages its’ employees and their
families to participate in these activities as ‘Volunteers’ and
contribute their skills and expertise in capacity building of the
community during their spare time.
Government of Jharkhand has recognized the efforts of KGVK
in Health and has converged with KGVK to strengthen its
health service delivery activities with special reference to
Reproductive and child Health (RCH). It has also recognized
KGVK as a Regional Resource Centre (RCC) for all health
related training.
KGVK has alliances and partnerships with reputed national
and inter national agencies such as US-AID, CEDPA, FUTURE,
CARE, CAPART, ICICI Bank, NFI, IRH, Georgetown University,
Washington, India Canada Environment Facility, IFC
Washington, World Bank funded SWA-Shakti, CINI, JTDS,
Johns Hopkins University (Baltimore- USA), Goal India, BAU,
ICAR Palandu, ISRO, Lac Research Institute, Govt. of India,
Govt. of Jharkhand and local NGOs.
Members of Parliament of the area had also contributed to
KGVK hospitals in recent past, out of their MP Local
Development Funds.
Forward Looking Statements
Statements in this report describing the Company’s objectives,
projections, estimates and/or expectations may be “forward-
looking statements” within the meaning of applicable securities
laws and regulations. As the forward-looking statements involve
uncertainties and risks, readers are cautioned not to place
undue reliance on such statements. Actual results could differ
materially from those expressed or implied. Important factors
that could make difference to the Company’s operations
include economic conditions affecting demand/supply and
price conditions in the domestic and overseas markets in which
the Company operates, changes in the Government regulations,
tax laws and other statutes, policies and other incidental
factors. The Company does not undertake any obligation to
publicly update, inform or revise such statements, whether as
a result of developments, events or actual materialisation.

Annexure to the Directors’ Report
Information as per Section 217(1)(e) of the Companies Act,
1956 read with Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988, and forming part
of the Directors’ Report for the year ended 31st March, 2006
A. Conservation of Energy
a. Energy conservation measures taken :
i. Commissioning of waste heat recovery boiler based
power plant in DRI.
ii. Reuse of waste oil in furnaces.
iii. Modification of feeding system to use low grade
coal (grade D/E) in producer gas plant.
iv. Re-engineering of hydraulic network in WRM resulting
in energy savings.
v. Reduction in no. of blowers in reheating furnace
by optimising the blower efficiency.
vi. Installation of FRP fans for the cooling blowers for
energy savings in WRM.
vii. Reduction in no. of mill compressors by optimising
the compressor efficiency.
viii.Regular monitoring of leakages of compressed air,
oxygen and fuel oil to save fuel.
ix. Scheduled monitoring of major energy consuming
equipment through installation of energy meters at
different locations.
x. Controlling of idle running of equipment during
stoppages to save energy.
b. Additional investments and proposals, if any, being
implemented for reduction of consumption of energy:
i. 40 TPH char & coal based boiler for power
generation will utilise waste char for DRI plant.
ii. Railway siding will reduce substantially dumper
movement resulting in fuel (diesel) saving.
iii. Reduction of fuel consumption in the walking beam
furnace in WRM.
iv. Maximising the efficiency of LP pumps/HP pumps
in pump house in WRM.
v. Auxiliary power consumption at 25MW CPP will be
reduced by improving the efficiency of boiler and
TG during major shutdown.
vi. Improved oxygen and carbon injection system in
electric arc furnace to save power consumption and
improve productivity.
Energy conservation is an ongoing process and there is a
continuous programme to create awareness and motivate the
employees to conserve energy through small group activities.
c. Impact of measures at (a) and (b) above for reduction
of energy consumption and consequent impact on the
cost of production of goods ;
With the implementation of the above measures, energy
cost is expected to be reduced and consequently there
will be impact on the cost of production.
DIRECTORS’ REPORT 11
d. Total energy consumption and energy consumption per
unit of production as per Form-A of the Annexure to
the Rules in respect of industries specified in the Schedule
thereto annexed.
B. Technology Absorption
1. Research and Development (R & D)
a) Specified areas in which R & D carried out by the
Company :
The in-house R & D Cell at Ranchi has contributed in
developing products and processes of the Company.
The year under review shall be commemorated as year
of product performance. This augmented level of
performance has thrown a global challenge in most of
the high end markets like crane rope, aerial haulage
and elevator ropes etc and the products are poised to
set global benchmarks in terms of quality and cost.
The TPM Excellence Award was also received only for
the outstanding efforts put in by the Company in the
field of process and product improvement, some of
which are highlighted as under:
i) Developed elevator cord for use in cable sheathed
belt demand for which from elevator industry is likely
to increase.
ii) Developed fully galvanized plastic coated LRPC strand
for the construction industry.
iii) Developed low stretch elevator governor ropes for
meeting the stringent requirement of high rise
elevators.
iv) Improved the life of monocable aerial haulage
ropes by 20-25%.
v) Supply of 1800 Mt of anchor mooring ropes to
Delmar, USA which are of extremely high breaking
strength.
vi) Developed premier fishing ropes for the domestic
and international market with substantially higher
life.
vii) High contributing wire portfolio has been created
for industrial chain components, hosiery needle,
metallic card clothing, submarine power cable and
oil tempered wire.
b) Benefits derived as a result of above R & D.
i. Increase in market share of high end products.
ii. Better quality and widening of product range and
entry into new markets with value added products.
iii. Reduction of waste by utilisation of iron ore fines
by briquetting /sintering.
iv. Increasing the usage of sponge iron fines in the
electric arc process, thereby reducing cost of steel
making.
v. Development of Tellurium based lead bearing free
cutting steel for high speed machining applications.
vi. Improvement in tundish metallurgy to increase yield
of continuous cast blooms.
12
vii. Improved product performance has augmented the
customers satisfaction level especially in highly
demanding high end product market.
viii. Increase in the consistency and reliability of both
products and equipment.
ix. Abatement in the cost of production
c) Future plan of action :
i. To induce awareness of newly developed products.
ii. Migrate from convential ropes to special plastic
filled ropes in mining and crane application
iii. Development of special type of end fittings for
special purpose rope operating under stringent
requirement.
iv. Development of forging quality steel through a
bigger size bloom caster.
v. Development of bearing steels speciality steel
products and new grades of steel.
d) Expenditure on R & D (Rs. in lacs)
i) Capital — C. Foreign Exchange Earning and outgo
ii) Recurring — 1. Activities relating to exports, initiatives taken to increase
iii) Percentage of total turnover —
2. Technology absorption, adoption and innovation :
i. Efforts, in brief, made towards technology
absorption, adoption and innovation.
Have has successfully adapted foreign technologies
for production of sophisticated grades of steel and
steel wire ropes.
Have successfully adopted the technology for the
production of sponge iron, which is a process of
making Direct Reduced Iron (DRI) using indigenous
coal.
Have successfully insulated itself from the fluctuations
of the cost of metallics by innovative practices using
hot metal, sponge iron and returned reusable scrap.
ii. Benefits derived as a result of the above efforts :
1. Improvement of product quality.
2. Steel grades with negligible amounts of injurious
tramp elements.
3. Approvals from several high end OEMs for the
supply of steel wire rods and bars.
4. Cost reduction through improved production
process.
5. Meeting all requirements and specifications
for the international market.
iii. Information regarding technology imported during
last five years - Nil.
exports, development of new export markets for products
and services and export plans already explained in
Directors’ Report and MD&A.
2. Total Foreign Exchange earned and used for the year
is as follows :
(Rs. in Lacs)
Foreign Exchange earned 32791.54
Foreign Exchange used 21726.61
 DIRECTORS’ REPORT 13

FORM A
Conservation of Energy
Annexure to Directors’ Report-Information under Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of Directors’ Report
31st March, 31st March,
2006 2005
A) POWER AND FUEL CONSUMPTION
1) Electricity
a) Purchased
Units (in thousands) 97223 66071
Total amount (Rs. In Lacs) 3950 2706
Rate/Unit (Rs.) 4.06 4.10
b) Own Generation
i) Through Diesel Generator
Units (in thousands) 5234 5349
Units per ltr. of Diesel Oil 2.97 2.93
Cost/Unit (Rs.) 8.93 7.70
ii) Through Coal Based Power Plant
Units (in thousands) 206106 178673
Units per Kg. of Coal 0.92 0.88
Cost/Unit (Rs.) 1.25 1.24
iii) Through Steam Turbine/Generator
Units (in thousands) 23379 23470
Units per ltr. of Fuel Oil 319 332
Cost/Unit (Rs.) 0.07 0.06
iv) Through Natural Gas
Units (in thousands) — —
Units per C.M. of Gas — —
Cost/Unit (Rs.) — —
2) Furnace Oil
Quantity (K. Ltrs) 1140 1214
Total Cost (Rs. In lacs) 163 132
Avg. Rate (Rs.) 14268 10841
3) Light Diesel Oil
Quantity (K. Ltrs.) 1358 456
Total Cost (Rs. In lacs) 353 94
Avg. Rate (Rs.) 26007 20585
B) CONSUMPTION PER UNIT OF PRODUCTION (UNIT : MT)
Wire/Wire Ropes/Conveyor Cords/Bright Bars
Electricity (Units) 516 513
Wire Rods
Electricity (Units) 169 173
Billets
Electricity (Units) 511 424
Pig/Hot Metal
Electricity (Units) 127 127
Sponge Iron
Electricity (Units) 69 94
JFTC
Electricity (Units-CKM) – 6
House Wire
Electricity (Units-KM) – 277

On behalf of the Board of Directors

Kolkata P. Jhawar R. Jhawar
6th May, 2006 Vice Chairman Managing Director
 14
Statement pursuant to Section 212 of the Companies Act. 1956 Relating to Subsidiary Companies
UM Cables Usha Siam Brunton Usha Martin Usha Martin Usha Martin Usha Martin Usha Umicor Brunton European EMM Caspian EMM Brunton
Limited Steel Shaw UK Singapore Australia International Americas, Martin UK Africa Wolf Wire Management Limited Kazakhstan Shaw
Industries Limited Pte. Limited Pty Limited Limited Inc. Limited (Pty.) Ropes & Marine Limited Americas, Inc.
Public Limited FZCO Corporation
Company Limited
Limited
1 Financial Year of the 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st Mar, 31st M ar, 31st Mar, Note 6
Subsidiary Company on 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006

2 Extent of Interest in 11,129,660 13,200,000 Note 1 1,000,000 Note 4 7,326,388 700,000 Note 1 Note 5 Note3 Note 1 Note 2 Note 2 300000
Subsidiary Equity Ordinary Shares of S$ 1 Ordinary Shares of 3044451 114 shares of
i) Number of Shares Shares of Shares each fully paid Shares US$ 1 each Ordinary Ordinary US $ 1 each
Rs. 10 each of Thai Baht 10 of GBP 1 fully paid Shares of Shares fully paid
fully paid each fully paid each fully paid Rand 1 of AED
each each 1 each
fully paid fully paid
(ii) Extent of holding 100.00% 97.85% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 60.00% 100.00% 100.00% 100.00% 9.10%
(As on 31st March, 2006)

3 Net aggregate amount of

Profit/(loss) of subsidiary
companies for the financial
year so far it concerns the
members of Usha Martin Ltd.
(a) Dealt within the
Company Accounts
(i) for the financial Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
year of the subsidiary
(ii) for the previous 26,521,441 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil
financial years of the Note 6
subsidiary since it
became the subsidiary
of the Company
(b) Not dealt within the
Company’s accounts
(i) for the financial Rupees Thai Baht GBP S$ AUS $ GBP US $ GBP Rand AED GBP GBP Nil
year of the subsidiary 37,998,430 15,101,269 818,982 905,301 (131,843) 1,843,152 375,559 854,763 - 1,171,672 388,482 143,920
(ii) for the previous Rupees Thai Baht GBP S$ AUS $ GBP US $ GBP Rand AED GBP GBP Nil
financial years of the (43,746,727) (336,898,365) (912,676) 717,746 - 21,474 (2,655,000) 541,995 (7,491,564) 862,782 1,303,362 507,514
subsidiary since it
became the subsidiary
of the Company
Notes :-
1 These are the subsidiaries of the Company by virtue of provision of Section 4 (I) (c) of the Companies Act, 1956, as 100% of its equity is held by Usha Martin International Limited.
2 These are the subsidiaries of the Company by virtue of provision of Section 4 (I) (c) of the Companies Act, 1956, as 100% of its equity is held by European Management and Marine Corporation Limited (EMMC). EMMC is a
100% subsidiary of Usha Martin International Limited.
3 This is a subsidiary of the Company by virtue of provision of Section 4 (I) (c) of the Companies Act, 1956, as 60% of its equity is held by the Company.
4 This is a subsidiary of the Company by virtue of provision of Section 4 (I) (c) of the Companies Act, 1956, as 100% of its equity is held by Usha Martin Singapore Pte. Limited.
5 The Board of Directors of the Company has decided to initiate liquidation proceeding for winding up of this subsidiary.
6 This is a subsidiary of the Company by virtue of Section 4 (I) (c) of the Companies Act, 1956, as 90.9% of its equity is held by Usha Martin International Limited and the balance equity is being held by the Company. Since the
company was incorporated on 25th January, 2006, the first financial year of the subsidiary will be for a period from 25th January, 2006 to 31st March, 2007.
7 During the year, Usha Martin Scandinavia A/S, a wholly owned subsidiary of Usha Martin International Limited was disposed off.
8 During the year, pursuant to the Scheme of amalgamation sanctioned by the Hon’ble High Court at Calcutta on 12th April, 2006 under the provisions of the Companies Act, 1956, the undertaking of Usha Martin Holdings Limited,
the transferor company (a wholly owned subsidiary of the Company) stand transferred to and vested in the Company with effect from 1st April, 2005.
On behalf of the Board of Directors

Kolkata P. Jhawar R. Jhawar

Dated : 6th May, 2006 Vice Chairman Managing Director
 DIRECTORS’ REPORT 15

Report on Corporate Governance interactions with customers, shareholders, investors, employees,

A. COMPLIANCE OF MANDATORY REQUIREMENTS
I. Company’s Philosophy on Corporate Governance
The philosophy of the Company on corporate governance
envisages the attainment of the highest level of transparency,
accountability and equity in all areas of its operations and
government authorities and lenders.
II. Board of Directors
The Board of Directors of the Company consists of one Non
Executive Chairman, one Non Executive Vice Chairman, five
Non Executive Independent Directors (of whom two are nominee
directors), one non-Executive Director and two Executive
Directors.

Composition of Board of Directors and other details as on 31 March, 2006 are as under :

Executive/ No. of Other* Other* committee # No. of Equity

Non Executive/ directorships positions held Shares held
Independent held
As Member
As Chairman [including
Chairmanship]
Mr. B K Jhawar Chairman, Non Executive 2 None 1 16462
Mr. Brij K Jhawar Non Executive 1 None None 24973
Mr. P Jhawar Vice Chairman, Non Executive 3 None None 132220
Mr. R Jhawar Managing Director, Executive 3 None 1 36957
Dr. P Bhattacharya Joint Managing Director, Executive 3 None 1 -
Mr. N J Jhaveri Non Executive, Independent 12 3 8 47400
Mr. U V Rao Non Executive, Independent 7 2 3 -
Mr. A K Chaudhri Non Executive, Independent None None None -
Mr. M J Subbaiah (Represents ICICI Bank – Lender) 5 1 6 -
Non Executive, Independent
Mr. J K Ray** (Represents IDBI Bank – Lender) 1 None 1
Non Executive, Independent

*Excluding Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956.
#Only two committees viz, Audit and Shareholders Grievance Committees have been considered for this purpose.
Mr R K Agrawal resigned with effect from 21st December, 2005 and taken on record in the meeting held on 28th January,
2006.
**Nominated by IDBI Bank Ltd in place of Mr Dilip Mandal with effect from 20th December, 2005 and taken on record in the
meeting held on 28th January, 2006.
None of the Directors hold any Convertible Instruments of the to the Board of the Company.
Company. Annual declarations have been received from directors
All independent directors of have confirmed their ‘independence’ informing committee positions they occupy in other companies.
16

Attendance of the Directors at the meetings of the Board and at the last AGM.

Six Board Meetings were held during the year on 11th May, 2005, 27th July, 2005, 5th September, 2005, 10th October, 2005,
9th December, 2005 and 28th January, 2006.

Name of Directors Board Meetings Attendance at the last AGM

held on 27th July,2005

Held Attended
Mr. B K Jhawar 6 4* Yes
Mr. Brij K Jhawar 6 3 No
Mr. P Jhawar 6 1** No
Mr. R Jhawar 6 5*** Yes
Dr. P Bhattacharya 6 5 Yes
Mr. R K Agarwal+ 6 - No
Mr. N J Jhaveri 6 5 Yes
Mr. U V Rao 6 6 Yes
Mr. A K Chaudhri 6 3 No
Mr. M J Subbaiah 6 4 No
Mr. D Mandal ++ 6 4 No
Mr. J K Ray+++ 6 - NA

*Present through tele-conference in two meetings for which no sitting fees were paid
**. Present through tele-conference in five meetings for which no sitting fees were paid
*** Present through tele-conference in one meeting
+ Resigned with effect from 21st December, 2005
++ Nomination withdrawn by IDBI Bank Ltd with effect from 20th December, 2005
+++Nominated by IDBI Bank Ltd with effect from 20th December, 2005

Code of Conduct Mr. N J Jhaveri, Chairman of the Committee was present at the
In pursuance of Clause 49 of the Listing Agreement, the Board last Annual General Meeting to answer shareholders queries.
has approved the ‘Code of Conduct for Board of Directors and In pursuance of the Securities and Exchange Board of India
Senior Management’ and the same has been circulated and (Prohibition of Insider Trading) Regulations, 1992 (duly amended),
posted on the Company’s website. The Board of Directors and the Board has approved the ‘Code of Conduct for Prevention of
the senior management staff have given their declarations Insider Trading’ (Code) and authorised the Audit Committee to
confirming compliance of the provisions of the above Code of implement and monitor the various requirements as set out in
Conduct. the Code.
III. Audit Committee Composition of the Audit Committee as on 31st March, 2006
The terms of reference of the Audit Committee include the powers and the attendance during the year are as under :
set out in Clause 49 II (C) and role as stipulated in Clause 49 II No. of No. of
(D) of the Listing Agreement. Meetings Meetings
There were five meetings of the Audit Committee held during the held Attended
year on 10th May, 2005, 27th July, 2005, 10th October, 2005, Mr. N J Jhaveri Chairman Non Executive, 5 5
28th January, 2006, and 13th March, 2006. independent
The Audit Committee meeting was held on 10th May, 2005 where Mr. U V Rao Member Non Executive, 5 5
the Annual Accounts for the year ended 31st March, 2005 were Independent
discussed and reviewed before recommendation to the Board.
At other meetings, the Committee also discussed and reviewed Mr. A K Chaudhri Member Non Executive, 5 3
annual business plan and internal audit reports. Independent
The Audit Committee also reviewed the quarterly financial results All the members of the Audit Committee are financially literate
during the year before placing the same to the Board for approval. with knowledge in finance and accounts.
 DIRECTORS’ REPORT 17

The Managing Director, the Joint Managing Director, Business Sitting fee of Rs.5000 is being paid to every Non Executive Director
Heads, Head of Finance and Head of Internal Audit remain for attending each meeting of the Board and its Committees.
present in the meetings of the Audit Committee as invitees. This has also been approved by a special resolution passed by
The statutory auditors also remain present, as invitees at the the shareholders at the Annual General Meeting held on 27th
meetings of the Audit Committee to discuss and review quarterly July, 2005.
results and annual accounts. Besides the sitting fees as aforesaid, the approval of the
The cost auditors attend the Audit Committee meetings as and shareholders by a special resolution passed at the Annual General
when required. Meeting held on 31st July, 2003 enables the Company to pay
The Company Secretary acts as the Secretary to the Audit commission to its non executive directors at the rate of 1% of the
Committee. net profits of the Company computed in the manner referred to
IV. Remuneration Committee in Section 198(1) of the Companies Act, 1956 for each of the
The Company has a Remuneration Committee, comprising 3 five financial years commencing from 1st April, 2003 in such
members namely Mr. U. V. Rao (Chairman – Independent), Mr. manner as may be determined by the Board.
P. Jhawar (Non Executive) and Mr. Brij K Jhawar (Non Executive), As per the decision of the Board of Directors at their meeting
appointed as a member of the Committee with effect from 28th held on 8th July, 1998, Mr. B K Jhawar, Chairman is entitled to
January, 2006 in place of Mr. D Mandal on withdrawal of his 50% of commission payable to non executive directors and the
nomination by IDBI Bank Limited. balance is being shared amongst other non executive directors
The Remuneration Committee reviews and recommends the terms equally on pro rata basis.
of appointment and remuneration of the Executive Directors
keeping in view the present compensation packages for approval Other than above, there are no other pecuniary relationship or
by the Board as well as the Shareholders. transactions with any of the non executive directors.
During the year no meeting of the Remuneration Committee was V. Shareholders Committees
held.
(a) Investors’ Grievance Committee
The break-up of remuneration to Managing Director and Joint
Managing Director for the year 2005-06 is given below : The Investors’ Grievance Committee functioned under the
chairmanship of Mr. R. K. Agrawal, an independent non-executive
(Rs. in thousands)
director ( till his resignation with effect from 21st December,
Names Mr. Rajeev Jhawar Dr. P.Bhattacharya 2005) and the other two members of the Committee being Mr.
Rajeev Jhawar and Dr. P. Bhattacharya, both executive directors.
Position Managing Director Joint Managing Director
Mr Brij K Jhawar, a non-executive director was appointed as a
Salary (Rs.) 2400 2100 member of the Committee with effect from 28th January, 2006
in place of Mr R K Agrawal. During the year, the Committee met
Commission (Rs.) 20385 10193
4 times to review the status and redressal of shareholders’/
Allowances ( Rs) 1400 2390 investors’ complaints.
Contribution to Status of complaints of shareholders/investors is as under :
Provident Fund,
Gratuity and Superannuation Complaints pending as on 1st April, 2005 -
Funds (Rs.) 848 742 Number of Complaints received during 41
Perquisites (Rs.) 1457 145 the year ended 31st March 2006
Total (Rs.) 26490 15570 Number of Complaints attended to/resolved 41
during the year
Service Contract 5 Years 5 Years
(From 19th May, 2003 to (From 15th May, 2003 Complaints pending as on 31st March, 2006 -
18th May, 2008) to 14th May, 2008)
(b) Share Transfer Committee
Notice Period 6 months notice 6 months notice
The Share Transfer Committee comprises Mr. Prashant Jhawar,
from either side from either side
Mr. Rajeev Jhawar, and Dr. P. Bhattacharya. The committee
Severance fees 6 months salary 6 months salary generally meets every fortnight to decide on matters relating to
in lieu of notice in lieu of notice issues including approval of transfer and transmission of securities,
There are no stock options given to the directors during the year. issue of duplicate certificates etc.
The break up of remuneration to Non-Executive Directors for the The Share Transfers are processed on behalf of the Company by
year 2005-06 is given below : the Registrar and Transfer Agents viz. MCS Limited which are
Sitting fees - Rs. 2.40 lacs placed before the Committee for approval. The Committee met
19 times during the year.
Commission - Rs. 101.93 lacs
18

Number of Share Transfers pending for – 9 Deeds for 740 c) Presentations made to the media, analysts, institutional
approval as on 31st March, 2006 shares investors, fund managers, banks, financial institutions
(since transferred on 1st April, 2006) and others from time to time are also posted on the
Compliance Officer : Mr. A K Somani, Company Company’s Website as aforesaid.
Secretary 2A, Shakespeare Sarani d) Management Discussion and Analysis is covered in the
Kolkata – 700 071. Directors’ Report to the Shareholders and forms a part
Phone : 033-39800300 ; of the Annual Report.
Fax : 033-39800400
IX. General Shareholders Information
Email : aksomani@ushamartin.co.in
(a) Date and Venue of Annual General Meeting
VI. General Body Meetings
Date Type Venue Time No. of Special The Nineteenth Annual General The date and venue
Resolutions Meeting of the Company was of Twentieth Annual
27th July, 2005 AGM Vidya Mandir, Kolkata 3.00 PM 1 held on 27th July,2005 at 3.00 pm General Meeting of
at Vidya Mandir, 1 Moira Street, the Company will be
27th July, 2004 AGM Vidya Mandir, Kolkata 3.00 PM 1
Kolkata-700071. intimated in due course
31st July, 2003 AGM Science City Auditorium, 3.00 P M 2
Kolkata (b) Financial Calendar
There were no special/ordinary resolutions put through postal Financial Year
ballot in the last meeting held on 27th July, 2005. ended 31st March, 2006 Meeting held on
As on date, no resolution is proposed to be conducted through First Quarter Results-30.06. 2005 27th July, 2005
postal ballot in the ensuing Annual General Meeting.
Second Quarter Results-30.09.2005 10th October, 2005
As required under Clause 49 IV(G)(i) of the Listing Agreement,
Third Quarter Results-31.12. 2005 28th January, 2006
information on Directors who are retiring by rotation and
offering themselves for reappointment will be given in the Audited Results for the year 6th May, 2006
notice of the Annual General Meeting. ended 31.03.2006
VII. Disclosures Next Financial Year Meeting on or before
Ø There were no materially significant related party ending 31st March, 2007
transactions (i.e transactions of the Company of material First Quarter Results-30.06.2006 31st July, 2006
nature) made by the Company with its Promoters, Directors
or Management, their subsidiaries or relatives etc. that Second Quarter Results-30.09.2006 31st October, 2006
may have potential conflict with the interests of the Third Quarter Results-31.12.2006 31st January, 2007
Company at large. Transactions with the related parties
Audited Results for the year 31st May, 2007
are disclosed in Note 23 of Schedule 17 to the Accounts
ending 31.03.2007
in Annual Report.
Ø There were no strictures or penalties imposed by either (c) Book Closure Dates
SEBI or the Stock Exchanges or any statutory authority for The Share Transfer Books and The Book Closure dates
non-compliance of any matter relating to Capital Market Register of Members for ensuing AGM
during the last three years. were closed from 18th July, 2005 will be intimated
Ø All mandatory requirements have being appropriately to 27th July, 2005 in due course
complied with and the non mandatory requirements are (both days inclusive)
dealt with at the end of the Report.
(d) Dividend Announcements
VIII. Means of Communications
Dividend for the financial : 30 per cent on face value
a) In compliance with Clause 41 of the Listing Agreement,
year 2004-05 of Rs. 5/- per share
the Company regularly intimates un-audited as well as
audited financial results to the Stock Exchanges immediately Dividend Payment Date : Dividend warrants were posted
after they are taken on record by the Board. Such financial on 1st August, 2005 after
results are published in national English and vernacular adoption of accounts by the
daily newspapers viz. Business Standard/ Financial Express shareholders on 27th July, 2005
and Dainik Statesman (local vernacular) Dividend for the financial : 55 per cent (proposed) on
b) The financial results and official news releases are posted year 2005-06 face value of Rs. 5/- per share
on the Company’s website www.ushamartin.com. The Dividend Payment Date : Dividend warrants will be posted
quarterly financial results and other shareholder related within 7 days of adoption of
information are also posted on SEBI EDIFAR site. accounts by the shareholders.
 DIRECTORS’ REPORT 19

(e) Exchanges where Company ’s shares are listed at (g) Performance of Company’s share prices vis-à-vis BSE Sensex
and scrip code numbers
Stock data BSE Sensex NSE Nifty

The Calcutta Stock Exchange Association Ltd – 31004 (closing) (closing) (closing) (closing)
7, Lyons Range 2005
Calcutta - 700 001 April 79.65 6154.44 79.30 1902.50
The Mumbai Stock Exchange – 517146 May 83.70 6715.11 83.90 2087.55
Phiroze Jeejeebhoy Towers, Dalal Street June 75.25 7193.85 75.30 2220.60
Mumbai – 400 001/55 July 104.15 7635.42 104.35 2312.30
National Stock Exchange of India Ltd- ushamart August 154.15 7805.43 154.45 2384.65
Exchange Plaza, 5 th Floor, September 190.25 8634.48 190.90 2601.40
Plot No.C/1, G Block, October 159.55 7892.32 158.75 2370.95
Bandra Kurla Complex, Bandra (E)
November 179.60 8788.81 179.60 2652.25
Mumbai - 400 051
December 170.00 9397.93 169.45 2836.55
Societe de la Bourse de Luxembourg – 2006
Societe Anonyme/R.C.B 6222
B.P. 165, L-2011 Luxembourg January 160.80 9919.89 169.45 3001.10
February 168.00 10370.24 168.10 3074.70
March 186.55 11279.96 186.25 3402.55
The Listing Fee for all the above Stock Exchanges have been (h) Registrar and Transfer Agents (both for demat and
duly payed for the year 2005-06. physical)
GDRs are listed at Luxembourg Stock Exchange. The contact details of the Registrars are as under:
M/s. MCS Limited
(f) Market Price – High/Low and the Volume Share Price Data
77/2A, Hazra Road
Kolkata : 700 029
BSE NSE VOLUME Phone : 033-24767350(4 lines)
Fax : 033-24541961/24747674
Stock data High Low High Low BSE NSE Total Email : mcscal@cal2vsnl.net.in
Contact Person : Mr. Alok Mukherjee, General Manager
2005
(i) Share Transfer System
April 96.00 77.80 95.80 77.25 1890689 4156060 6046749 The application for transfers, transmission, sub-division
and consolidation are received by the Registrar and Share
May 92.00 76.00 92.00 75.60 2496665 4940602 7437267 Transfer Agent of the Company. The share transfer in
physical form are processed and the share certificates
June 84.90 74.65 84.50 75.00 966527 2210671 3177198 returned within a period of 30 days from the date of
receipt provided the documents are in order.
July 115.00 74.50 115.00 74.60 5940310 9565394 15505704
As the Company’s shares are currently traded in de-
August 165.00 114.00 164.80 102.40 8763753 17795657 26559410 materialised form, the transfers are processed and
approved in the electronic form by NSDL/ CDSL with
September 228.90 152.10 229.35 151.00 16680783 34768030 51448813 whom the Company have entered into separate
agreements.
October 202.90 157.20 202.50 157.10 2799662 6363306 9162968
(j) Distribution of Shareholding (as on 31.03.2006)
November 193.40 153.60 192.85 153.25 2239346 6000584 8239930 Range No. of Percentage Number of Percentage
shareholders shares
December 190.00 162.50 190.00 161.70 2376032 5545609 7921641
1-100 34972 80.85 1375693 3.11
2006 101-500 6688 15.46 1588369 3.59
501-1000 835 1.93 680751 1.54
January 178.00 155.55 177.50 156.10 1038082 2390389 3428471
1001-5000 552 1.28 1244030 2.81
February 179.65 155.50 179.80 156.55 1586846 2973487 4560333 5001-10000 79 0.18 590374 1.34
10001 & above 128 0.30 38769139 87.61
March 200.70 167.90 200.40 160.00 2332086 4337317 6669403
Total 43254 100.00 44248356 100.00
20

(k) Pattern of Shareholding (as on 31.03.2006) The Company’s equity shares have to be traded compulsorily
in dematerialised form with effect from 21st March, 2000.
Category No. of shares % of The ISIN No. of the Company’s equity shares is INE228A
held shareholding
01027.
A. Promoters holding (m) Outstanding GDR/ADRs/Warrants or any convertible
1) Promoters instruments, conversion date and likely impact on equity
a. Indian Promoters As at 31st March, 2006 there are 3036242 outstanding GDRs
each representing one equity share of the Company. During
i) Brij Investments Private the year, 7223763 GDRs were issued and 6510795 GDRs were
Limited 1518416 3.43 converted into equity shares.
ii) Prashant Investments As at 31st March, 2006, there are 58,00,000 outstanding
Limited 618972 1.40
convertible equity warrants which were issued during the year
iii) Usha Martin Ventures on preferential basis to certain promoter group companies
Limited 1768180 4.00
against receipt of 10% of the consideration of Rs.153 per
iv) UMIL Share & Stock Broking warrant. Each warrant is convertible into one equity share of
Services (P) Ltd 6343376 14.34 nominal value of Rs.5 each in lots at the option of warrant
v) Usha Martin Finance holders within eighteen months from the date of allotment (i.e.
Limited 2319957 5.24 10th October, 2005) upon payment of balance consideration
vi) Prajeev Investments by the warrant holders.
Limited 1115694 2.52 (n) Plant Locations
vii) Peterhouse Investments Divisions Locations
Limited 2388291 5.40
Steel Division Adityapur, Jamshedpur-831001
viii) Others (Holding
individually less than Wire Ropes & Speciality Tatisilwai, Ranchi-835103
1% shares) 1070747 2.41 Products Division
Wire & Wire Rope Division Hoshiarpur, Punjab – 146 024
b. Foreign Promoters - -
North
2) Persons acting in Concert - - Machinery Division Bangalore- 560014
Sub-Total 17143633 38.74 (o) Address for Correspondence:
B. Non-Promoters Holding Usha Martin Limited, 2A, Shakespeare Sarani, Kolkata -700071
3) Institutional Investors Person to contact for shareholders enquiry
a. Mutual Funds and UTI 3454121 7.81 Mr. Kalyan Chatterjee
Senior Manager (Secretarial)
b. Banks, Financial Institutions,
Insurance Companies (Central/ 2A, Shakespeare Sarani, Kolkata - 700 071
State Gov. Institutions/ Phone : 033-39800494, Fax : 033-39800400
Non-Government E-Mail : investor-relati@ushamartin.com
Institution) 2832075 6.40 B. STATUS OF ADOPTION OF THE NON MANDATORY
c. FIIs 8947743 20.22 REQUIREMENTS
Sub-Total 15233939 34.43 The Board
4) Others The Board has already taken the decision to maintain Chairman’s
offices and paying/reimbursing all expenses [including rent] incurred
a. Private Corporate
Bodies 3529927 7.98 for performance of his duties from time to time. However, some of
the independent directors have the tenure of more than nine years
b. Indian Public 5151448 11.64
in aggregate considering their respective initial date of induction on
c. NRIs/OCBs 152917 0.35 the Board.
d. Any other (Foreign Co., Remuneration Committee
Foreign Residents &
GDRs (Note) 3036492 6.86 The Company has a Remuneration Committee as reported in Section
A.IV above.
Sub-Total 11870784 26.83
Audit Qualification
GRAND TOTAL 4,42,48,356 100.00
The Company does not have any qualification pertaining to the
Note : Total Foreign holding is the sum
of holdings of FIIs, NRIs/OCBs, Foreign Financial Statements.
Nationals and GDRs 1,21,37,152 27.43 Other Items
(l) Dematerialisation of shares and Liquidity The rest of the Non Mandatory Requirements such, Shareholder
As at 31st March, 2006, 92.49 per cent of the total equity sharesare Rights; Training of Board Members; Mechanism for evaluating non-
held in electronic form with National Securities Depository Limited executive Board Members and Whistle Blower Policy will be
(NSDL) and Central Depository Services Limited (CDSL). implemented by the Company as and when required and/or deemed
necessary by the Board.
 DIRECTORS’ REPORT 21

AUDITORS CERTIFICATE REGARDING

COMPLIANCE OF CONDITIONS OF
CORPORATE GOVERNANCE

To the Members of Usha Martin Limited

We have examined the compliance of conditions of Corporate
Governance by Usha Martin Limited for the year ended
st
31 March 2006, as stipulated in Clause 49 of the Listing
Agreement of the said Company with stock exchanges in India.
though the Company’s established risk assessment and
minimization procedures [together with internal control system
for financial reporting] are in the process of being formalized/
updated.

The compliance of conditions of Corporate Governance is the We state that such compliance is neither an assurance as to
responsibility of the Company’s management. Our examination the future viability of the Company nor the efficiency or
was carried out in accordance with the Guidance Note on effectiveness with which the management has conducted the
Certification of Corporate Governance [as stipulated in Clause affairs of the Company.
49 of the Listing Agreement] issued by the Institute of Chartered
Accountants of India and was limited to procedures and (P Law)
implementation thereof, adopted by the Company for ensuring Partner
the compliance of the conditions of Corporate Governance.
Membership No. F 51790
It is neither an audit nor an expression of opinion on the
For and on behalf of
financial statements of the Company.
Price Waterhouse
In our opinion and to the best of our information and according Chartered Accountants
to the explanations given to us, we certify that the Company Plot No. Y-14, Block-EP, Sector-V
has complied with the conditions of Corporate Governance Kolkata Salt Lake Electronic Complex
as stipulated in the above mentioned Listing Agreements ; 6th May, 2006 Bidhan Nagar, Kolkata – 700 091

Declaration

As provided under Clause 49 of the Listing Agreements with the stock exchanges, it is hereby declared that all the board members
and senior management personnel of the Company have affirmed the compliance of Code of Conduct for the year ended
31st March, 2006.

Kolkata R. Jhawar
6th May, 2006 Managing Director

Persons constituting group coming within the definition of “group” as defined in the Monopolies and Restrictive Trade Practices
Act, 1969 include the following:

UMIL Share Stock Broking Services Limited, Peterhouse Investments Limited, Usha Martin Ventures Limited, Usha Martin Finance
Limited, Prajeev Investsments Limited, Brij Investments Private Limited, Prashant Investments Limited, Basant Holdings Limited,
Shauma Vanijya Pratisthan Limited, MHI Cables & Conductors Limited, Anupriya Real Estate Private Limited, Usha Martin
Construction Steel Limited, Kenwyn Overseas Limited, UCT Properties Private Limited, Neutral Publishing House Limited, Usha
Breco Limited, Ushacomm India Private Limited, Usha Communication Technology BVI
22

AUDITORS’ REPORT TO THE MEMBERS OF USHA MARTIN LIMITED

1. We have audited the attached Balance Sheet of Usha Martin Limited as at 31st March, 2006 and the related Profit and Loss Account and
the Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. The
aforesaid financial statements incorporate the transactions relating to the Company’s office at Ho Chi Min City, Vietnam. We have audited
these transactions on the basis of returns, records, information and explanations received from this office which we have not visited. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as, evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report)(Amendment) Order, 2004
(together the ‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956
of India (the ‘Act’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according
to the information and explanations given to us, we report that :
i) a) The Company has maintained proper records to show full particulars including quantitative details and situation of its fixed assets.
b) The fixed assets of the Company have been physically verified by the management according to a phased programme designed
to cover all items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company
and the nature of its assets. Pursuant to such programme, a portion of the fixed assets has been physically verified by the
management during the year and no material discrepancies between the book records and the physical inventory have been
noticed.
c) In our opinion and according to the information and explanations given to us, the Company has not disposed off a substantial
part of its fixed assets during the year.
ii) a) The inventory (excluding items lying in customs bonded warehouse and with third parties) of the Company have been physically
verified by the management during the year. In respect of inventory lying with third parties, these have been substantially confirmed
by them. In our opinion the frequency of verification is reasonable.
b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate
in relation to the size of the Company and the nature of its business.
c) On the basis of our examination of the inventory records, in our opinion, the Company has maintained proper records of inventory
other than, in respect of partly finished products (year-end balance Rs.1583 lacs) of two Divisions which have been determined
by the management based on physical verification as at the year end. The discrepancies noticed on physical verification of inventory
as compared to book records, where applicable, were not material.
iii) a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register
maintained under Section 301 of the Act. Accordingly, the clauses (iii) (b), (iii)(c) and (iii)(d) of the paragraph 4 of the Order are
not applicable.
b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register
maintained under Section 301 of the Act. Accordingly, the clauses (iii) (f) and (iii) (g) of the paragraph 4 of the Order are not
applicable.
iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and records of the Company and according to the information and
explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct major weakness
in the aforesaid internal control system.
v) a) In our opinion and according to the information and explanations given to us the particulars of contracts or arrangements referred
to in Section 301 of the Act have been entered in the Register required to be maintained under that Section.
b) There have been no transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five
lacs in respect of any party during the year other than preferential allotment of Equity Warrants to certain companies at a price
determined in keeping with the SEBI Guidelines as indicated in Note 10 on Schedule 17 to the Accounts and also dealt with vide
paragraph 3 (xviii) below.
vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of
Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with
regard to the deposits accepted from the public. According to the information and explanations given to us, no Order has been
passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal
on the Company in respect of the aforesaid deposits.
vii) The Company’s internal audit system is designed to cover all significant areas over a period of two years. In our opinion, it is
commensurate with the size of the Company and nature of its business.
viii) We have broadly reviewed the books of account maintained by the Company in respect of certain products where, pursuant to the
Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section
 AUDITORS’ REPORT 23

(1) of Section 209 of the Act and are of the opinion, that, prima facie, the prescribed accounts and records have been made and maintained.
We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
ix) a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the
Company has generally been regular in depositing during the year undisputed statutory dues including Provident Fund, Investor
Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
Duty, Cess and other material statutory dues, as applicable, with the appropriate authorities.
b) According to the information and explanations given to us and the records of the Company examined by us, as at 31st March,
2006, there were no dues in respect of Wealth Tax, Service Tax and Cess which have not been deposited on account of dispute
other than certain disputed Income-tax, Sales Tax, Excise Duty and Customs Duty dues, in respect of which amounts involved
and forums at which dispute is pending have been indicated in Note 28 on Schedule 17 to the Accounts.
x) The Company has no accumulated losses as at 31st March, 2006 and it has not incurred any cash losses in the financial year ended
on that date or in the immediately preceding financial year.
xi) According to the records of the Company examined by us and the information and explanations given to us, the Company has not
defaulted in repayment of dues to any financial institution or bank or debenture holders during the year.
xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other
securities.
xiii) The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company.
xiv) In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.
xv) In our opinion and according to the information and explanations given to us, terms and conditions of the guarantees given by the
Company for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the
Company.
xvi) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied
for the purpose for which they were obtained.
xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and
explanations given to us, there are no funds raised on a short-term basis which have been used for long- term investment.
xviii) As indicated in Note 10 on Schedule 17 to the Accounts, the Company has made preferential allotment of Equity Warrants to certain
companies covered in the register maintained under Section 301 of Act during the year. In our opinion and according to the information
and explanations given to us, the price at which such equity warrants have been issued is not prejudicial to the interest of the
Company.
xix) The Company has created securities or charge in respect of debentures issued and outstanding at the year end.
xx) The management has disclosed the end use of money raised by public issues vide Note 30 on Schedule 17 to the Accounts and
the same has been verified by us.
xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and explanations given to us, we have neither come across any instance
of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.
4. Further to our comments in paragraph 3 above, we report that :
i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose
of our audit ;
ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination
of those books ;
iii) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the
books of account ;
iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with
the applicable accounting standards referred to in sub-section (3C) of Section 211 of the Act ;
v) On the basis of written representations received from the directors and taken on record by the Board of Directors, none of the directors
is disqualified as on 31st March, 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274
of the Act ;
vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together
with the notes thereon and attached thereto give in the prescribed manner the information required by the Act, and give a true and
fair view in conformity with the accounting principles generally accepted in India :
a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006 ;
b) In the case of the Profit and Loss Account, of the profit for the year ended on that date ; and
c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.
(P Law)
Partner
Membership No. F 51790
For and on behalf of
Kolkata Price Waterhouse
6th May, 2006 Chartered Accountants
24

BALANCE SHEET as at 31st March, 2006

(Rupees in Thousand)
Schedule 31st March, 31st March,
Reference 2006 2005
SOURCES OF FUNDS
Shareholders’ Funds
Capital 1 221,920 185,801
Equity Warrants 88,740 -
[ Note 10 on Schedule 17 ]
Reserves and Surplus 2 5,605,048 5,915,708 4,321,939 4,507,740

Loan Funds 3
Secured Loans 6,717,748 7,661,952
Unsecured Loans 158,367 6,876,115 597,349 8,259,301
Net Deferred Tax Liability [ Note 22 on Schedule 17 ] 1,335,064 1,076,817
14,126,887 13,843,858
APPLICATION OF FUNDS
Fixed Assets 4
Gross Block 14,914,639 13,864,314
Less: Depreciation 5,879,443 5,174,302
Impairment Loss 188,024 188,024
Net Block 8,847,172 8,501,988
Capital Work-in-Progress 695,615 9,542,787 435,770 8,937,758
Investments 5 1,525,755 1,395,403
Current Assets, Loans and Advances
Inventories 6 2,621,667 2,840,534
Sundry Debtors 7 1,982,492 2,513,970
Cash and Bank Balances 8 517,489 389,655
Other Current Assets 9 225,640 195,738
Loans and Advances 10 1,648,665 2,108,995
6,995,953 8,048,892
Less:
Current Liabilities and Provisions 11
Liabilities 3,769,487 4,421,653
Provisions 210,109 176,380
3,979,596 4,598,033
Net Current Assets 3,016,357 3,450,859
Miscellaneous Expenditure
(to the extent not written off or adjusted)
Deferred Revenue Expenditure [ Note 5 on Schedule 17 ] 41,988 59,838
14,126,887 13,843,858
Notes on Accounts 17

This is the Balance Sheet referred to in our report of even date Schedules referred to above form an integral
part of the Balance Sheet.
(P. Law)
Partner
Membership No. F 51790
For and on behalf of
PRICE WATERHOUSE P. Jhawar Vice Chairman
Chartered Accountants R. Jhawar Managing Director
Kolkata Dr. P. Bhattacharya Jt. Managing Director
6th May, 2006 A. K. Somani Company Secretary
 COMPANY ACCOUNTS 25

PROFIT AND LOSS ACCOUNT for the year ended 31st March, 2006
(Rupees in Thousand)

Schedule 2005-06 2004-05

Reference
INCOME
Turnover (Gross) 13,771,836 12,705,816
Less : Excise Duty 1,419,753 807,099
Turnover (Net) 12,352,083 11,898,717
Other Income 12 94,846 9,801
12,446,929 11,908,518
EXPENDITURE
Purchase of General Merchandise 9,616 234,347
Raw Materials Consumed 13 5,311,187 5,058,815
(Increase)/Decrease in Stock-in-Trade 14 (155,097) 115,285
Manufacturing, Selling and Administrative Expenses 15 4,824,375 4,540,524
Depreciation 760,996 702,040
Interest ( Note 15 on Schedule 17 ) 730,603 704,511
Adjustments for Items Capitalised and
Departmental Orders for own consumption (42,136) (29,763)

11,439,544 11,325,759

PROFIT BEFORE TAXATION 1,007,385 582,759

Current Tax 85,000 50,000
Fringe Benefit Tax 12,200 -
Deferred Tax 260,544 124,025

PROFIT AFTER TAXATION 649,641 408,734

Profit brought forward from Previous year 403,112 357,775

PROFIT AVAILABLE FOR APPROPRIATIONS 1,052,753 766,509

APPROPRIATIONS
Transfer to General Reserve 500,000 300,000
Proposed Dividend on Equity Shares 121,683 55,537
Provision for Dividend Tax (Note 31 on Schedule 17) 17,066 7,860
Balance Carried to Balance Sheet 414,004 403,112
1,052,753 766,509

Notes on Accounts 17
Basic Earning per Equity Share of Rs. 5/- each - Rs. 16.20 11.04
Diluted Earning per Equity Share of Rs. 5/- each - Rs. 16.06 11.04
(Note 16 on Schedule 17)

This is the Profit and Loss Account referred to in our Schedules referred to above and Schedule 16
report of even date. form an integral part of the Profit and Loss Account

(P. Law)
Partner
Membership No. F 51790
For and on behalf of
PRICE WATERHOUSE P. Jhawar Vice Chairman
Chartered Accountants R. Jhawar Managing Director
Kolkata Dr. P. Bhattacharya Jt. Managing Director
6th May, 2006 A. K. Somani Company Secretary
26

Schedules to Accounts
(Rupees in Thousand)
31st March, 31st March,
2006 2005
1. SHARE CAPITAL
Authorised
100,000,000 Equity Shares of Rs.5/- each 500,000 500,000
10,000,000 Redeemable Cumulative Preference Shares of Rs.50/- each 500,000 500,000
1,000,000 1,000,000
Issued, Subscribed and Paid-up

44,248,356 (Previous Year 37,024,593) Equity Shares of Rs. 5/-

each fully paid up [Note below] 221,242
Add: Shares Forfeited 678 221,920 185,801

221,920 185,801

NOTES :

1. Out of the above 44,248,356 Equity Shares -

a) 3,036,284 (Previous Year 2,323,274) Equity Shares represent Global Depository Receipts (GDRs).
(b) 11,476,811 Equity Shares allotted as fully paid up pursuant to the Scheme of Amalgamation without payment being
received in cash.
2. During the year the Company has issued and allotted 7,223,763 GDRs, each representing one fully paid up Equity Shares
of Rs.5/- each at a premium of Rs.151/- (Aggregate Offer Price US $ 3.4608 per GDR ) per GDR, ranking pari passu in
all respect with the existing Equity Shares.

2. RESERVES AND SURPLUS

As At 31st Additions Transfer/ As at 31st
March, 2005 during the Adjustments March, 2006
year during the year
A. RESERVES
Capital Reserve 6,911 30,000 (a) - 36,911
Capital Redemption Reserve 228,500 - - 228,500
Securities Premium Account 2,118,657 1,090,756 31,044 (b) 3,178,369
Debenture Redemption Reserve 806,050 - - 806,050
General Reserve 758,709 500,000 317,495 (c) 941,214
3,918,827 1,620,756 348,539 5,191,044
B. SURPLUS
Profit and Loss Account 403,112 414,004 403,112 414,004
4,321,939 2,034,760 751,651 5,605,048
Notes :
(a) Represents Capital Investment Incentive Subsidy received during the year.
(b) Represents adjustments of Share/ GDR issue Expenses Rs.33,348 (Schedule 15), after netting off tax effect.
(c) Refer Note 8 on Schedule 17.
 COMPANY ACCOUNTS 27

Schedules to Accounts (Contd.)

(Rupees in Thousand)
Security 31st March, 31st March,
as per Note 2006 2005
3. LOANS
Secured Loans
Debentures
600,000 9% Secured Redeemable Non-convertible Debentures of Rs.33.50 each - 20,100
(Redeemed during the year )
500,000 9% Secured Redeemable Non-convertible Debentures
of Rs.66.67 each (Previous Year Rs.100/- each) 1 33,333 50,000
Above Debentures are redeemable in two equal annual instalments
on 14th November, 2006 and 14th November, 2007 respectively
500,000 9% Secured Redeemable Non-convertible Debentures of Rs.33.33 each - 16,667
(Redeemed during the year )
Term Loans From -
Financial Institution - Foreign Currency Loan 2 71,392 1,165,115
Banks
Rupee Loans 2 3,333,233 2,903,733
Foreign Currency Loans 2 2,535,748 1,838,185
Interest Free Sales Tax Loan
from a State Government 3 144,747 191,329
Vehicles Loan from Banks 5 3,547 5,727
Working Capital Loans from
Financial Institutions
Rupee Loan 4 - 100,000
Foreign Currency Loan 4 52,506 402,063
Banks
Rupee Loan 4 480,312 284,212
Foreign Currency Loans 4 62,930 684,821
6,717,748 7,661,952
Unsecured Loans
Fixed Deposits
[ Repayable within one year Rs.105,040 ( Previous Year Rs.143,260) ] 157,375 295,861
Interest free Sales Tax Loan from a State Financial Institution 992 1,488
Loan from Banks (Long Term ) - 300,000
158,367 597,349
6,876,115 8,259,301
NOTES:
1. 9% Privately Placed Secured Redeemable Non-convertible Debentures are secured by a Joint Mortgage by deposit of title deeds with Trustees for the
Debentureholders in respect of certain immovable properties and by English Mortgage on certain immovable properties and hypothecation over movable assets
of the Company
(other than book debts) subject to prior charges of the Company’s Bankers on specified movable assets for Working Capital requirements.
2. Term Loans from Financial Institutions and Banks are secured by way of Joint Equitable Mortgage by deposit of title deeds of certain immovable properties
and hypothecation over movable assets of the Company subject to prior charges of the Company’s Bankers on specified movable assets for Working Capital
requirements.
3. Sales Tax Loan by way of deferred sales tax benefit on the expansion of capacity is secured by way of joint mortgage by deposit of title deeds on
certain immovable properties ranking pari-passu with existing lenders. The amount is payable in equal instalments over a period of 5 years starting from
1st April, 2004.
4. Working Capital Loans from Financial Institutions and Banks are secured by hypothecation of all current assets of the Company. Further such loans from
Banks are also secured by charge on certain immovable properties, subject to prior charges in favour of Financial Institutions, Banks and/ or Trustees for
Debentures created/ to be created in respect of any existing/ future financial assistance/ accommodation which has been/ may be obtained by the Company.
Securities as mentioned in Note 1 and some of the Securities as mentioned in Notes 2 and 3 rank pari-passu.
5. Vehicle loans from Banks are secured by way of hypothecation of the vehicles financed.
 28
4 . FIXED ASSETS (Rupees in Thousand)
GROSS BLOCK DEPRECIATION IMPAIRMENT LOSS NET BLOCK
Cost Additions Sales / Cost As on 31st Consequent to For the On Items Sold / Total up to As on 31st As on 31st As on 31st As on 31st
as on 31st Consequent to during Adjustments as on 31st March, acquisition/ year Adjusted 31st March, March, March, March,
March, 2005 acquisition/ the year during the March, 2005 amalgamation during the March, 2005 2006 2006 2005
amalgamation year 2006 year 2006
A. Tangible Assets Note (v) ] [ Note (v) ]
below below
Land and Site Development
Freehold 108,347 17,971 14,746 - 141,064 - - - - - - - 141,064 108,347
Leasehold 148,077 - - - 148,077 6,570 - 840 - 7,410 - - 140,667 141,507
Mining Lease and Development - - 39,061 - 39,061 - - 487 - 487 - - 38,574 -
Buildings 1,999,879 19,716 75,846 - 2,095,441 370,585 - 61,002 - 431,587 - - 1,663,854 1,629,294
Plant and Machinery 10,571,424 13,583 758,773 51,321 11,292,459 4,402,473 6 619,393 51,312 4,970,560 188,024 188,024 6,133,875 5,980,927
Railway Sidings - - 144,097 - 144,097 - - 18 - 18 - - 144,079 -
Electrical Installation 619,928 255 494 - 620,677 184,131 - 41,920 - 226,051 - - 394,626 435,797
Water Treatment & Supply Plant 151,341 - - - 151,341 51,446 - 5,524 - 56,970 - - 94,371 99,895
Office Equipment 79,889 - 4,872 1,197 83,564 51,986 - 7,568 945 58,609 - - 24,955 27,903
Schedules to Accounts (Contd.)

Furniture and Fixtures 50,820 152 2,552 9 53,515 35,034 - 5,213 5 40,242 - - 13,273 15,786
Vehicles 69,220 1,388 14,324 4,978 79,954 32,844 3 5,953 3,602 35,198 - - 44,756 36,376
13,798,925 53,065 1,054,765 57,505 14,849,250 5,135,069 9 747,918 55,864 5,827,132 188,024 188,024 8,834,094 8,475,832
B. Intangible Assets [Note (iii)]
below
Computer Softwares ( Acquired ) 65,389 - - - 65,389 39,233 - 13,078 - 52,311 - - 13,078 26,156

13,864,314 53,065 1,054,765 57,505 14,914,639 5,174,302 9 760,996 55,864 5,879,443 188,024 188,024 8,847,172 8,501,988
Capital Work in Progress - - - - - - - - - - - - 695,615 435,770
(Note iv)
below
Total 13,864,314 53,065 1,054,765 57,505 14,914,639 5,174,302 9 760,996 55,864 5,879,443 188,024 188,024 9,542,787 8,937,758
Previous Year 12,620,814 - 1,265,726 22,226 13,864,314 4,486,649 - 702,040 14,387 5,174,302 - 188,024

NOTES :
(i) Land and Buildings include Rs.87,193 (Previous Year Rs.86,038) in respect of which Deed of Conveyance is under execution.
(ii) Assets given on operating leases are set out below :

Gross Block Depreciation for the year Accumalated Depreciation Impairment Loss
As on 31st As on 31st Total up to Total up to As on 31st As on 31st
March, March, 31st March, 31st March, March, March,
2006 2005 2005-06 2004-05 2006 2005 2006 2005
Land 7,913 7,913 - - - - - -
Buildings 24,828 24,828 829 829 9,240 8,411 - -
Plant and Machinery 144,499 43,887 2,482 1,224 79,480 24,121 45,981 9,154
177,240 76,628 3,311 2,053 88,720 32,532 45,981 9,154

(iii) Includes Rs.94,517 ( Previous Year net of Rs.155,972 ) (Net) being adjustment in foreign currency term loans arising from change of exchange rate.
(iv) Capital Work in Progress includes Project Development Expenses Rs.12,676 (Previous Year Rs.41,248).
(v) Refer Notes 8 and 9 on Schedule 17.
 COMPANY ACCOUNTS 29

Schedules to Accounts (Contd.) (Rupees in Thousand)

31st March, 31st March,

2006 2005
5. INVESTMENTS

- At Cost or Under
Long Term
Unquoted
Trade 10,135 127,350
Others 1,001 1,001
Subsidiary Companies 1,514,619 1,282,052
1,525,755 1,410,403

Less: Provision for Diminution in

value of investments - 1,525,755 15,000 1,395,403

1,525,755 1,395,403
Note : Refer Note 12 on Schedule 17

31st March, 31st March,

2006 2005
6. INVENTORIES

[Note 1(f) on Schedule 17]

Stores and Spare Parts (Note below) 253,626 214,482

Loose Tools 127,694 92,156

Raw Materials 684,127 902,570

Goods-in-Transit 300,749 682,371

Partly Finished Products 380,396 265,158

Stock-in-Trade

Finished Products 852,450 629,581

Scrap 22,625 54,216

2,621,667 2,840,534

Note - Includes Machinery Spares Rs. 972 (Previous Year Rs.972)

30

Schedules to Accounts (Contd.) (Rupees in Thousand)

31st March, 31st March,

2006 2005
7. SUNDRY DEBTORS

Unsecured –
Exceeding six months

Considered Good 297,360 310,841

Considered Doubtful 73,605 78,069

370,965 388,910
Others
Considered Good 1,685,132 2,203,129

2,056,097 2,592,039

Less : Provision for Doubtful Debts 73,605 78,069

1,982,492 2,513,970

8. CASH AND BANK BALANCES

Cash in hand (including Drafts and Cheques in hand -

Rs.806 ; Previous Year Rs. 57) 1,858 2,192

Remittances-in-Transit 52 -

Balance with Scheduled Banks on :

Current Accounts 12,112 16,198
Unpaid Dividend Accounts 2,797 2,982
Fixed Deposit Accounts 500,556 368,116

[ including Rs. 40,556 (Previous Year Rs.38,116) held under Rule

3A of the Companies (Acceptance of Deposits) Rules, 1975 ]

Balance with a Non-Scheduled Bank

Ngan Hang Ngoai Thuong Nam Bank - Vietnam [ Maximum

amount outstanding at anytime during the year Rs. 298;
(Previous Year Rs. 563)] 114 167

517,489 389,655
 COMPANY ACCOUNTS 31

Schedules to Accounts (Contd.) (Rupees in Thousand)

31st March, 31st March,

2006 2005
9. OTHER CURRENT ASSETS

Unsecured
Unquoted - at Cost or under

87,533, 6.6% Tax Free ARS Bonds of Rs. 100/- each issued by the
Administrator of the Specified Undertaking of the Unit Trust of India 8,753 8,753
[Under Rule 3A of the Companies (Acceptance of Deposits) Rules,1975]

Miscellaneous Deposits 220,079 190,177

31st March, 31st March,

2006 2005
Note :
Considered Good 225,640 195,738
Considered Doubtful 3,192 3,192
228,832 198,930
228,832 198,930
Less : Provision for Doubtful Miscellaneous Deposits 3,192 3,192
225,640 195,738

10. LOANS AND ADVANCES

Unsecured-
Advances recoverable in cash or in kind or
for value to be received 1,258,506 1,694,900
Balance with Cental Excise and Other Government Authorities 152,446 88,108
Advance against Purchase of Land 42,109 -
Loans/Advances to Subsidiaries 205,978 343,058
Inter Corporate Loans 20,063 12,666
Accrued Interest 28,641 29,341

31st March, 31st March,

2006 2005

Note :
Considered Good 1,648,665 2,108,995
Considered Doubtful 59,078 59,078

1,707,743 2,168,073

1,707,743 2,168,073

Less : Provision for Doubtful Advances 59,078 59,078

1,648,665 2,108,995
32

Schedules to Accounts (Contd.) (Rupees in Thousand)

31st March, 31st March,

2006 2005
11. CURRENT LIABILITIES AND PROVISIONS

Liabilities
Acceptances 1,862,142 2,741,690
Sundry Creditors ( Note 7 on Schedule 17 ) 1,701,248 1,439,918
Sundry Advances from Customers 70,772 74,406
Dues to Subsidiaries 4,020 4,312
Investors Education and Protection Fund shall be
credited by the following amounts namely [ Note below ]
Unclaimed dividend 2,797 2,982
Unclaimed Matured Fixed Deposits 9,619 7,880
Unclaimed Matured Debentures 1,234 1,249
Unclaimed interest on above 3,973 5,765
Deposits [includes Rs. 24,500 (Previous Year Rs.37,041)
for Assets given on lease] 40,256 51,437
Interest accrued but not due on Loans 73,426 92,014

3,769,487 4,421,653
Provisions
Current Taxation (Net) 71,360 113,054
Proposed Dividend
On Equity Shares 121,683 55,537
Tax thereon 17,066 7,789
210,109 176,380
3,979,596 4,598,033

Note : No amount is due at the balance sheet date for actual credit.

12. OTHER INCOME 2005 – 06 2004 – 05

Income from Long Term Investments - Trade
- Dividend 480 480
Provision /Liabilities no longer required written back 11,343 2,387
Provision for Diminution in value of Investment no longer required written back 15,000 -
Profit on Sale of Long Term Investments 9,670 -
Profit on Redemption of Investment - 2
Profit on Sale of Fixed Assets (Net) 11,919 626
Claims Received 4,972 1,284
Miscellaneous Income ( Note 11 on Schedule 17 ) 41,462 5,022
94,846 9,801
 COMPANY ACCOUNTS 33

Schedules to Accounts (Contd.) (Rupees in Thousand)

2005 – 06 2004 – 05
13. RAW MATERIALS CONSUMED

Opening Stock
Raw Materials 902,570 422,802
Partly Finished Products (including Cost of Conversion Rs.27,536 ;
Previous Year Rs.28,783) 265,158 268,006

1,167,728 690,808
Acquired pursuant to a Business Transfer Agreement @
Raw Materials 1,411
Partly Finished Products 20,030 21,441 -
Add : Purchases 5,186,541 5,535,735

6,375,710 6,226,543
Deduct: Closing Stock
Raw Materials 684,127 902,570
Partly Finished Products (including Cost of Conversion Rs. 29,966 ;
Previous Year Rs.25,557) 380,396 265,158

5,311,187 5,058,815
@ Refer Note 9 on Schedule 17

14. (INCREASE)/DECREASE IN STOCK-IN-TRADE

Opening Stock 683,797 799,082

Acquired pursuant to a Business Transfer Agreement @ 36,181 -
719,978 799,082
Deduct : Closing Stock 875,075 683,797

(155,097) 115,285
@ Refer Note 9 on Schedule 17
34

Schedules to Accounts (Contd.) (Rupees in Thousand)

2005 – 06 2004 – 05

15. MANUFACTURING, SELLING AND ADMINISTRATIVE EXPENSES

Salaries, Wages and Bonus (Net) 419,508 393,124

Contribution to Provident and Family Pension Funds 36,751 33,997
Contribution to Superannuation and Gratuity Funds 70,039 49,623
Workmen and Staff Welfare Expenses (Net) 148,426 135,712
Consumption of Stores and Spare Parts 935,064 754,479
Power and Fuel 1,181,916 977,165
Repairs and Maintenance
Buildings (Net) 47,103 39,813
Plant and Machinery 251,245 196,703
Others 13,358 6,069
Rent (Net of realisation Rs. 125 ; Previous Year Rs.512) 19,039 12,418
Hire Charges/Lease Rentals of Plant and Machinery 236 270
Rates and Taxes (including Wealth Tax of Rs.450 ; Previous Year Rs.300) 4,241 2,144
Insurance 18,938 22,549
Commission to Selling Agents 30,038 39,999
Freight, Transport and Delivery 739,161 885,606
Directors’ Remuneration (excluding perquisites and contributions
to Provident, Superannuation and Gratuity Funds
Rs. 3,192 included in other heads) - Schedule 16 49,301 28,148
Travelling Expenses (Net) 39,573 46,539
Processing Charges 53,942 45,239
Brokerage and Discount on Sales 231,135 181,020
Provision for Diminution in value of Investment - 15,000
Finance Charges relating to Prepayment of Loans and Other Items 27,221 91,119
Exchange Loss / (Gain) (Net) 90,308 140,529
Provisions for Doubtful Debts, Advances and Deposits 1,500 26,936
Deferred Revenue Expenditure Written off 24,432 29,000
Bad Debts and Advances Written off 9,048 176,890
Less : Write back of Provision for Doubtful Debts/ Advances 5,964 3,084 163,656 13,234
Share / GDR Issue Expenses 33,348 -
Less : Adjusted against Securities Premium Account (Schedule 2) 33,348 - - -
Excise Duty on Stocks, Replacements etc. 55,726 42,497
Miscellaneous Expenses (Net) 333,090 331,592
4,824,375 4,540,524
 COMPANY ACCOUNTS 35

Schedules to Accounts (Contd.) (Rupees in Thousand)

For the year ended

31st March, 2006

16. Schedule of Computation of Net Profit in accordance with Sections

198/349 of the Companies Act, 1956 for the purpose of Directors’
remuneration for the year ended 31st March, 2006

Profit Before Taxation as per Profit and Loss Account 1,007,385

Add : Provision for Doubtful Debts, Advances and Deposits 1,500
Provision for Wealth Tax as per Accounts 450 1,950
1,009,335

Less: Profit on Sale of Fixed Assets (Net) 11,919

Provision for Diminution in Value of Investment no longer required written back 15,000
Write back of Provision for Doubtful Debts/ Advances 5,964
Profit on sale of Long Term Investments 9,670 42,553
966,782
Add: Directors’ Remuneration 52,493

Net Profit under Section 198/349 1,019,275

DIRECTORS’ REMUNERATION

Mr. Rajeev Jhawar

Salary 2,400
Other Allowances 1,400
Commission @ 2% on Rs.1,019,275 20,385
Contribution to Provident,
Gratuity and Superannuation Funds 848
Perquisites 1,457 26,490

Dr. P. Bhattacharya
Salary 2,100
Other Allowances 2,390
Commission @ 1% on Rs.1,019,275 10,193
Contribution to Provident,
Gratuity and Superannuation Funds 742
Perquisites 145 15,570

Other Directors
Commission @ 1% on Rs.1,019,275 10,193
Meeting Fees 240 10,433
52,493
36

Schedules To Accounts
17. NOTES ON ACCOUNTS
1. Significant Accounting Policies
a) FIXED ASSETS
Fixed Assets (comprising both tangible and intangible items) are stated at cost of acquisition, manufacture and subsequent
improvements thereto including taxes, duties, freight and other incidental expenses related to acquisition and installation.
Preoperative expenses, where appropriate, are capitalised till the commercial use of the assets and write up due to
revaluation of assets are separately stated.
b) DEPRECIATION
i) Depreciation ( including amortisation ) is provided on Straight Line Method at the rates specified in Schedule XIV to
the Companies Act, 1956 other than the following :
- Certain items of Plant and Machinery - 20%
- Computer Softwares - 20%
In respect of assets existing as on 16th December, 1993, the specified period has been recomputed in terms of the
Notification No.GSR 756E dated 16th December, 1993 read with Circular No.14/93 dated 20th December, 1993 with
respect to revised rates and depreciation has been provided by allocating net book value of fixed assets as at the beginning
of the year over the remaining recomputed lives of respective assets.
ii) Depreciation on Assets given on Lease is provided on "Straight Line Method" at the rates specified in Schedule XIV
to the Companies Act, 1956 (as amended) or at the rates resulting in amortisation of the value of respective assets
over the primary lease period, whichever is higher.
iii) Leasehold Land is amortised over the tenure of respective leases.
iv) Mining Lease and Development is amortised over the tenure of lease or estimated useful life of the mine, whichever
is shorter.
v) No depreciation is provided on assets which are being used for trial run.
vi) Certain Plants are considered to be continuous process plant based on technical evaluation.
c) CAPITAL WORK-IN-PROGRESS
These are stated at cost and inclusive of preoperative expenses, project development expenses pending allocation and
assets-in-transit.
d) IMPAIRMENT LOSS
An impairment loss is recognised wherever the carrying amount of the fixed assets exceeds the recoverable amount i.e.
the higher of the assets' net selling price and value in use.
e) INVESTMENTS
Current Investments i.e. investments which are expected to be liquidated within one year are treated as Current Assets
and are valued at lower of cost and net realisable value. Long term investments are stated at cost or under and diminution
in value, other than temporary, is written down/ provided for.
f) INVENTORIES
Inventories other than scrap are valued at lower of cost and estimated net realisable value. Cost is determined on Weighted
Average Basis. Scrap is valued at estimated realisable value.
g) TRANSACTION IN FOREIGN CURRENCIES
Transactions in Foreign currency outstanding at the Balance Sheet date (i.e. monetary items) are accounted for at the
contracted rate when covered by forward contracts and at exchange rates prevailing on the Balance Sheet date in case
of others. Foreign currency non-monetory items carried in terms of historical cost are reported using the exchange rate
at the date of the transactions. Exchange differences are dealt with in the Profit and Loss Account, other than those relating
to acquisition of Fixed Assets which are capitalised. Such capitalisation is restricted to only acquisition of fixed assets from
a country outside India in case related foreign currency transactions are entered into on/ after 1st April, 2004.
h) RETIREMENT BENEFITS
Contributions payable in keeping with DefinedContribution schemes are funded and recognised as year's expenditure.
Contributions under Defined Benefit schemes, as determined on the basis of actuarial valuation, are also funded and
recognised as year's expenditure. Provision is also made for Leave Encashment based on actuarial valuation.
i) REVENUE RECOGNITION
Income and Expenditure are recognised on accrual basis unless otherwise stated.
Revenue is recognised on completion of sale of goods, rendering of services and use of the Company's resources by
third parties. Sales are recorded net of trade discount, sales return, rebates and sales taxes but including excise duties
and export incentives.
Dividend income on investments is accounted for when the right to receive the payment is established.
 COMPANY ACCOUNTS 37

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

1. Significant Accounting Policies (contd.)
j) BORROWING COST
Borrowing Cost attributable to the acquisition and construction of qualifying assets are added to the cost up to the date
when such assets are ready for their intended use. Other borrowing costs are recognised as expenses in the period in
which these are incurred.
k) DEFERRED REVENUE EXPENDITURE
Compensation under Voluntary Retirement Schemes is amortised over a period ( not exceeding five years following the
year in which it is incurred ) over which the benefits are estimated to accrue.
l) RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on Research and Development (R & D) is charged in the year in which it is incurred.
Fixed assets for R & D are capitalised.
m) GOVERNMENT GRANTS
Government grants of the nature of promoters' contribution are credited to Capital Reserve.
Government grants related to specific fixed asset are deducted from gross values of related assets in arriving at their
book values.
Government grants related to revenue are recognised on a systematic basis in the Profi and Loss Account over the periods
necessary to match them with their related costs.
n) TAXATION
Current Tax in respect of taxable income is provided for the year based on applicable tax rates and laws. Deferred tax
is recognised subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the
difference between taxable income and accounting income that originate in one period and are capable of reversal in
one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively
enacted by the Balance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realisation.
Fringe Benefit Tax is accounted for based on the estimated fringe benefit for the period as per the related provisions of
the Income-tax Act, 1961.
o) PROVISION AND CONTINGENT LIABILITIES
The Company recognises a provision when there is a present obligation as a result of a past event that probably requires
an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent
liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an
outflow of resources or there is a present obligation, reliable estimate of the amount of which cannot be made. Where
there is a possible obligation or a present obligation and the likehood of outflow of resources is remote, no provision
or disclosure for contingent liability is made.
p) PRIOR PERIOD AND EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES having material impact
on the financial affairs of the Company are disclosed.
q) MATERIAL EVENTS occurring after the Balance Sheet date are taken into cognisance.
2. Outstanding Capital Commitments are estimated at Rs. 650,221 (Net of advances )(Previous Year Rs. 285,965)
3. a) According to the usual practice, Electricity Charges are being accounted for on the basis of bills received. Any
supplementary bill arisingout of revision in the rates will be accounted for as and when such bills are received.
b) Provision for Fuel Surcharge has been made as per interim order passed by the Hon’ble High Court of Patna.
4. Interest on delayed payments are being accounted for by the Company when the same are accepted by the other
parties/authorities. Due to uncertainty in realisation of incentives/ subsidies from the Government authorities, the same are
being accounted for in the year of receipt on prudent basis.
5. Deferred Revenue Expenditure represents :
As at As at
31st March, 2006 31st March, 2005
Compensation under Voluntary Retirement Scheme 41,988 59,838
6. There are Contingent Liabilities in respect of :
a) Bills discounted with Banks Rs.172,098 (Previous Year Rs.414,428 )
b) Bank Guarantees outstanding Rs.49,927 (Previous Year Rs.87,667 )
c) Demand for Sales Tax amounting to Rs.25,051 (Previous Year Rs.4,712) for earlier years not acknowledged as debts
and in respect of which the Company has preferred appeals before appropriate authorities.
d) Demand for Excise Duty Rs.18,559 (Previous Year Rs.16,527) not acknowledged as debts and in respect of which the
Company has preferred appeal before appropriate authorities.
38

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

e) Demand for interest Rs. 11,434 (Previous Year Rs.11,434) for non-payment of Excise Duty on electricity raised by Bihar
State Electricity Board not admitted and which is subjudice.
f) Demand for Customs Duty Rs. 7,317 (Previous year Rs.7,514 ) not acknowledged as debts and in respect of which the
Company had preferred appeal before appropriate authorities.
g) Guarantees given by the Company in connection with house building loans granted to the employees by the Housing
Development Finance Corporation Limited amounting to Rs. 72 (Previous Year Rs.106)
h) Corporate Guarantees given by the Company to secure the financial assistance / accommodation extended to other
Bodies Corporate amounting to Rs. 898,337 (Previous Year Rs.743,699).
i) Claims against the Company not acknowledged as debts Rs.40,765 (Previous Year Rs.39,824)

7. Sundry Creditors include Rs. 29,247 (Previous Year Rs.29,223) due to Small Scale Industrial Undertakings to the extent such
parties have been identified from the available documents/information.
List of names of Small Scale Industrial Undertaking to whom the outstanding were more than 30 days.
A D INDUSTRIES RECWELD ENGINEERS GENERAL INDUSTRIAL CORPORATION
B.S.ENGINEERING CO. SEHRA STEEL INDUSTRIES TRISHAKTI ALLOYS PVT. LIMITED
DEYASHI ENTERPRISES ALLIED INSTRUMENTS & THERMOCOUPLES KAMALJEET SINGH AHLUWALIA
INDUSTRIAL ENGG. CORP. ANJANA MINERALS PVT. LIMITED KAYPEE ENTERPRISES
LABAN ENGG.CONCERN ASSOCIATIED CHEMICALS INDUSTRIES ASHA ENGINEERING
MAIN ENGINEERING CONCERN ACME INDUSTRIES ACCURATE AUTO LATHES (P) LTD.
ORIENT ELECTRICAL ENGG.WORKS DREAM DUST ENTERPRISES BIHAR PRECESSION M/C TOOL MFG CO.
ORIENT ENGG. CO. D. R, ENTERPRISES DOLLY ENGINEERING WORKS
SPARES CORPORATION OF INDIA EMPIRE INDUSTRIES JET-TECH INDUSTRIES
SOMENATH ENTERPRISE ELECTRO POWER WORKS KALPANA ENINEERING
VENTOUX ENGG. CO. MINERALS PULVERISING CORPORATION K.K.RUBBER INDUSTRIES
AARJAY ENGG. ORP. RAG INDUSTRIES NATIONAL TOOLS AND ENGG CO
AGRAWAL PRESS SARVESH REFRACTORY PVT. LTD. PUROHIT INDUSTRIAL CORPN
BANSAL INDUSTRIAL GASES TATANAGAR REFRACTORIES & MINERALS CO. LTD SOFTEC INDUSTRIAL PRODUCTS
CHHOTANAGPUR ROPE WORKS HI TECH ELECTRIC CONCERNS SWASTIK ENGINEERING WORKS
CITIZEN CASTINGS AJANTA REFRACAST & CHEMICAL CO. HYTEK INDUSTRIES
HINDUSTAN TIMBER SUPPLY CO. BHAMRA BROTHERS KATEEL ENGG INDS PVT LTD.
INDIA MACHINERIES ATLANTIC ENGINEERING WORKS SHINE ENGINEERING WORKS
JANKI SCREEN PRINTERS SANDHU TECHNOCRATE S MS ENGG WORKS
JANTA MOTOR WORKS PRAKASH ENGINEERING WORKS THIRUMALA METAL AND ENGG WORKS
NATIONAL INDUSTRIAL CORP. DINDAYAL ROPES (INDIA)
PRAKASH ENGG. CO. HYDRAX INTERNATIONAL

8. a. Pursuant to the Scheme of Amalgamation (the Scheme) sanctioned by the Hon'ble High Court at Calcutta on 12th April,
2006 under the provisions of the Companies Act, 1956, the undertaking of Usha Martin Holdings Limited, the transferor
company, engaged in the business of an investment company, stand transferred to and vested in the Company with effect
from 1st April, 2005. Accordingly, the Scheme has been given effect to in these accounts in terms of the aforesaid High
Court order. The transferor company was a wholly owned subsidiary of the Company.

b. In terms of the sanctioned Scheme, all assets and liabilities of the transferor company have been incorporated in the
books of the Company at their respective fair values determined by an independent valuer appointed by the transferee
company and the resultant difference of Rs.317,495 being the excess of liabilities over assets so incorporated has been
debited to the General Reserve of the Company (Schedule 2). Upon the Scheme becoming effective, all the Equity Shares
held by the Company in the Share Capital of the transferee company and loans/ advances between the Company and
the transferor company stands cancelled.
 COMPANY ACCOUNTS 39

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

8. c. In keeping with the Accounting Standard 14 issued by the Institute of Chartered Accountants of India, Purchase Method
of accounting has been applied other than accounting for the difference of Rs.317,495 referred to in paragraph (b)
above ; such difference would have been recognised as Goodwill arising on amalgamation and amortised over a period
of not exceeding five years as per the aforesaid Accounting Standard. Had the accounting treatment prescribed in the
Scheme been same as that by the said Accounting Standard, the year-end carrying amount of fixed assets (with
corresponding effect on the year-end net assets) would have been higher by Rs.253,996 and the profit before tax for
the year would have been lower by Rs.63,499 considering amortisation period of five years.
d. Pending completion of the relevant formalities of transfer of certain assets and liabilities acquired pursuant to the Scheme
as mentioned above, such assets and liabilities remain included in the books of the Company under the name of the
transferor company.
9. Pursuant to a Business Transfer Agreement (BTA) dated 16th March, 2005 together with other subsequent agreements, the
Company had taken over the management and operational control of JCT Limited's Wire and Wire Rope Unit with effect
from 1st June, 2005 under an operating lease agreement. Thereafter, the Company acquired the business of the aforesaid
Wire & Wire Rope Unit of JCT Limited together with its Fixed Assets, specified Current Assets, specified Current Liabilities,
etc. with effect from 1st January, 2006 for a total consideration of Rs.115,891 comprising Rs.53,000 for Fixed Assets and
Rs.62,891 for specified Net Current Assets. Such consideration has been allocated/apportioned to individual items based
on management evaluation.
10. On 10th October, 2005, the Company had allotted on a preferential basis, to certain companies in the promoter group,
5800000 convertible Equity Warrants against receipt of 10% of the consideration of Rs.153 per warrant determined in
keeping with the related SEBI Guidelines. Each Warrant is convertible into one Equity Share of nominal value of Rs. 5 each
at a price of Rs.153 per share in lots at the option of the warrant holders within eighteen months from the date of allotment
in accordance with relevant SEBI Guidelines and the terms of the issue upon payment of balance consideration by the
warrant holders. The shares to be allotted would rank pari passu in all respect with the then existing Equity Shares. In case,
the conversion option is not exercised before the expiry of the period allowed for such conversion, 10% of the consideration
received as aforesaid shall be forfeited.
11. Miscellaneous Income includes Rs.35,009 representing refund made by Usha Martin International Limited (UMIL), a subsidiary
of the Company on account of loan taken by one of the subsidiary companies of UMIL from UMICOR Ropes Pty. Limited
(URPL), the then subsidiary of the Company. Thereafter URPL was wound up in 2002-03. The Company had written down/
charged off unrealisable carrying amount of its investment to the extent of Rs.49,259 in URPL in earlier years.

31st March, 2006 31st March, 2005

12 INVESTMENTS (At Cost or Under)
Long Term
Trade
Unquoted
Usha Martin Ventures Limited
24,00,000 Equity Shares of Rs. 10/- each fully paid (See Note ii ) - 120,000
Gustav Wolf Speciality Cords Limited ( GWSCL)
73,500 Equity Shares of Rs.10/- each fully paid up (See Note vii) 7,350 7,350
Usha Communications Technology Ltd. BVI
1,21,10,242 Ordinary Shares of USD 0.50 each fully paid (See Note iv) 2,785 -
Others
Unquoted
Adityapur Toll Bridge Company Limited -
100,000 Equity Shares of Rs.10/- each fully paid 1,000 1,000
UMI Special Steel Limited (under liquidation )
1,80,68,472 Equity Shares of Rs.10/- each fully paid 1 1

11,136 128,351

carried forward
40

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

31st March,2006 31st March,2005
12 INVESTMENTS (At Cost or Under)
Long Term
brought forward 11,136 128,351
Investments in Subsidiary Companies -
Unquoted
Usha Martin International Limited -
73,26,388 (Previous year 61,80,388)
Ordinary Shares of GBP 1 each fully paid (See Notes i and ii ) 716,719 627,330
UM Cables Limited -
1,11,29,660 Equity Shares of Rs. 10/- each fully paid 127,069 127,069
UM Cables Limited
15,00,000 10% Redeemable Cumulative Preference Shares
of Rs.100/-each fully paid 150,000 150,000
UM Cables Limited -
1,00,000 7% Redeemable Cumulative Preference Shares of
Rs.100/-each fully paid (See Note iii ) 10,000 -
Usha Siam Steel Industries Public Company Limited
1,32,00,000 (Previous year 90,00,000) Ordinary Shares
of Thai Baht 10 each fully paid (See Notes i and ii) 261,986 214,628
Brunton Shaw U.K. Limited
16,00,000 Ordinary Shares of GBP 1 each fully paid (See Note ii) - 111,213
Usha Martin Singapore Pte Ltd.
1,000,000 Ordinary Shares of SGD 1 each fully paid (See Note i ) 26,805 26,805
Usha Martin Holdings Limited
25,00,700 Equity Shares of Rs.10/- each fully paid (See Note iii) - 25,007
Brunton Wolf Wire Rope, FZCO -
114 Ordinary Shares of AED 1,00,000 each fully paid
(See Notes i , ii and ix) 177,680 -
Usha Martin Americas Inc. -
7,00,000 Shares of USD 1 each fully paid ( See Notes i and ii ) 31,052 -
Brunton Shaw Americas Inc
3,00,000 Shares of USD 1 each fully paid ( See Notes i and ii ) 13,308 -
UMICOR Africa (Proprietary) Limited -
3,044,451 Ordinary Shares of Rand 1 each fully paid
(See Notes viii and ix) - -
1,525,755 1,410,403
Less : Provision for Diminution in value of investment - 15,000
1,525,755 1,395,403
NOTES :
(i) The Investments in overseas subsidiaries have been accounted for at the exchange rate prevailing on the date of remittance/ advice.
(ii) Increase/ decrease in number and value represents shares acquired/ sold during the year.
(iii) Increase/ decrease in number and value represents shares acquired/ cancelled on amalgamation during the year. (Refer Note 8 above )
(iv) During the year 1,36,10,242 Ordinay Shares of USD 0.50 each of Usha Communication Technology Ltd. BVI were acquired on amalgamation
( refer Note 8 aove) for Rs.31,30 and 15,00,000 Ordinary Shares were sold for Rs.3,45.
(v) During the year 5,75,000 7 % Non-Cumulative Debentures of Rs.100 each amounting to Rs.57,500 of UM Cables Limited acquired on
amalgamation ( refer Note 8 on Schedule 17), were redeemed.
(vi) In case of unquoted long term investments in Subsidiary Companies, diminution, if any, in the year-end carrying amount, worked out solely
on the basis of their respective break-up values are considered to be temporary, in nature, having regard to long term strategic value, benefits
arising out of continuing business relationships etc.
(vii) The Company's ownership interest is 49% in GWSCL, a Joint Venture Company incorporated in India
(viii) During the year the Company acquired 30,44,451 Ordinary Shares of Rand 1 each of UMICOR Africa (Proprietary) Limited at a nil consideration
in respect of which the Board has decided to initiate liquidation proceeding.
(ix) Transfer of the following shares (acquired during the year) in the name of the Company are in process.
114 Ordinary Shares in Brunton Wolf Wire Rope FZCO.
3044451 Ordinary Shares in UMICOR Africa (Proprietary) Limited
 COMPANY ACCOUNTS 41

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year For the year
ended, ended,
31st March, 2006 31st March,2005

13. a) Salaries, Wages and Bonus include amount in respect of:

Power and Fuel 4,817 4,851
Repairs and Maintenance of Buildings 841 999
Repairs and Maintenance of Plant and Machinery 56,000 53,272
b) Total Consumption of Stores and Spares (including Loose Tools) 1,137,967 919,404
c) Workmen and Staff Welfare Expenses include
rent allowance paid to the employees 60,905 54,656

14. a) Advances recoverable in cash or in kind or value to be received

includes Capital Advances 42,552 95,756
b) Miscellaneous Deposits include the following
amounts deposited with various Government
Departments/Authorities etc :
Fixed Deposits 42 -
7% Government of India Bond 10 10
National Savings Certificate 5 5
Post Office Savings Bank Accounts 12 12
Presidency Post Master 1 1

15. Interest is made up as follows :

On Debentures 6,029 9,894
On Loans (including Rs.25,021 on
Fixed Deposits and Rs. 429,803 on Term Loans) 608,870 577,468
On Others 181,896 160,579

796,795 747,941
Less : Interest Recovered (Tax deducted at
source Rs.4,243 ; Previous Year Rs. 4,193 ) 66,192 43,430
730,603 704,511

16. Computation of Earning per Equity Share (Basic and Diluted )

I. Basic
(a) (i) Number of Equity Shares at the beginning of the year 37,024,593 37,024,593
(ii) Number of Equity Shares issued during the year 7,223,763 -
(iii)Number of Equity Shares at the end of the year 44,248,356 37,024,593
(iv) Weighted average number of Equity Shares outstanding
during the year 40,112,010 37,024,593
(v) Face Value of each Equity Share Rs. 5 5
(b) Profit after tax attributable to Equity Shareholders
Profit after Taxation 649,641 408,734
649,641 408,734
Basic Earning per Share [ (b) / (a)(iv) ] - Rs. 16.20 11.04
42

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year For the year
ended, ended,
31st March, 2006 31st March,2005
II. Diluted
(a) (i) Number of Potential Equity Shares at the beginning of the year - -
(ii) Number of Potential Equity Shares issed during the year
(Refer Note 10 on Schedule 17) 5,800,000 -
(iii) Number of Potential Equity Shares at the end of the year 5,800,000 -
(iv) Dilutive Potential Equity Shares at the end of the year determined
after taking into consideration the fair value and
the issue price per share 700,293 -
(v) Weighted Average number of Dilutive Potential Equity Shares
outstanding during the year 331,920 -
(vi) Weighted Average number of Equity Shares considered for
omputation of Diluted Earnings per share [ I(a)(iv)+II(a)(v)] 40,443,930 37,024,593
(b) Diluted Earnings per Share [ (I(b)/II(a)(vi) ] 16.06 11.04
17. Miscellaneous Expenses include :
Auditors’ Remuneration paid/payable during the year
Audit Fee 2,500 1,700
Tax Audit Fee 325 325
Other Matters (Certificates etc.) 2,800 1,180
Service Tax * - 190
Reimbursement of Expenses 68 79
5,693 3,474
* Exclusive of Service Tax Rs.492 (Previous year Rs.84)
not routed through Profit and Loss Account during the year.
18. Value of Imports Calculated on C.I.F. basis:
Raw Materials 1,811,400 2,015,861
Components and Spare Parts 115,624 86,819
Capital Goods 97,565 34,385
19. Expenditure (including on Capital Account)
in Foreign Currency on account of :
Anti Dumping Fee 1,059 -
Share (GDR) issue expenses (net) 26,078 -
Technical know how, Drawings and Designs,
Consultancy and Foreign Technician Fees 8,638 3,514
Traveling 9,206 12,411
Front end Fees and Commitment Charges 17,774 438
Ocean freight - 28,631
Interest 52,323 63,595
Commission to Selling Agents 9,964 11,516
Subscription etc 429 448
Bank Charges - 570
Listing Fees - 146
Representative Expenses and Remuneration 4,099 4,795
Registration Fees - 2,178
Legal Expenses - 140
Export Sales Expenses 14,919 5,986
Market Development Fees - 2,316
 COMPANY ACCOUNTS 43

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year For the year

ended, ended,
31st March, 2006 31st March, 2005
20. Amount Remitted in Foreign Currency on account of:
Dividend ( Net of Tax ) 3,583 1,791
Year ended Year ended
Year to which the dividend relates 31 March, 2005 31 March, 2004
Number of non-resident Shareholders 3 3
Number of Shares held by non-resident Shareholders 2,388,499 2,388,499
21. Earnings in Foreign Currency on account of:
Export of Goods (On F.O.B. basis) 3,202,697 4,325,717
Interest Received 40,244 28,390
Service Charges 78 4,346
Profit on sale of investments 1,126 -
Other Income (Refund of loan by a subsidiary - refer Note 11 above) 35,009 -
22. Year-end Deferred Tax balance comprises the following :
As at 31st As at 31st
March, 2006 March, 2005
Timing Difference resulting in liabilities/ (assets) on account of :
Depreciation as per tax law and books (a) 1,490,455 1,535,572
Unabsorbed tax depreciation/loss (b) (103,634) (418,652)
Disallowances allowable for tax purpose on payment (13,420) (4,705)
Provision for doubtful debts (42,854) (43,568)
Deferred Revenue Expenditure 6,344 8,170
Others ( c ) (1,827) -
Net Deferred Tax Liability 1,335,064 1,076,817
(a) Including Rs.7, acquired on amalgamation (Note 8 above)
(b ) Absorption expected based on future Taxable Income
(c ) After considering tax effect of Rs.2,304 Relating to Share/ GDR Issue Expenses [Note (b) on Schedule 2]
23. Related party disclosures pursuant to Accounting Standard 18 issued by the Institute of Chartered Accountants of India
( i ) Related Parties
(a) Where control exists :
Name Relationship
Usha Martin International Limited Subsidiary
Usha Martin Americas Inc. - Do -
Usha Martin UK Limited - Do -
Usha Martin Scandanavia A/S * - Do -
Usha Martin Australia Pty Limited - Do -
UMICOR Africa (Pty.) Limited - Do -
European Management and Marine Corporation Limited - Do -
EMM Caspian Limited - Do -
E.M.M Kazakhstan Limited - Do -
Usha Siam Steel Industries Public Company Limited - Do -
Brunton Shaw UK Limited - Do -
Usha Martin Singapore Pte. Limited - Do -
Brunton Wolf Wire Ropes FZCO. - Do -
Brunton Shaw Americas Inc. - Do -
UM Cables Limited - Do -
Gustav Wolf Speciality Cords Limited Joint Venture Company
44

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

(b) Others :
Usha Martin Ventures Limited @ Substantial Interest in voting power of the entity
UMI Special Steel Limited (under liquidation) - Do -
Mr. Rajeev Jhawar, Managing Director Key Management Personnel
Dr. P Bhattacharya, Joint Managing Director - Do -
* Ceased to be a subsidiary during the year.
@ Ceased to be an Associate during the year.
( ii ) Particulars of Transactions during the year ended 31st March, 2006
Subsidiary Substantial interest Key Joint Venture
Particulars Companies in voting power Management Company
of the entity Personnel
( a ) Sale of Goods 2,215,760 - - -
2,532,125 - - -
( b ) Purchase of Goods 5,408 - - -
53,151 - - -
( c ) Purchase of Fixed Assets 14,837 - - -
8,400 - - -
( d ) Dividend Received - 480 - -
- 480 - -
( e ) Dividend Paid - 2,652 55 -
- 1,326 28 -
( f ) Interest Paid / (Recovered) (Net) (28,673) (310) - -
(32,912) (340) - -
( g ) Directors' Remuneration - - Refer -
- - Schedule 16 -
( h ) Directors' Commission Paid - - 14,685 -
- - 7,344 -
( i ) Reimbursement/(Recoveries) of Expenses (Net) 9,729 1,200 - -
5,555 1,680 - 11
( j ) Rendering/ (Recoveries) of Management
and other Services 970 - - 7,926
4,346 - - 5,685
( k ) Sales Commission/ incurred - - - -
2,955 - - -
( l ) Investment in Equity and Preference Shares 368,786 - - -
2,086 - - -
( m )Loans/ Advances taken/ given (net) 136,731 - - -
64,187 (1,010) - -
( n ) Deposits Received - - - -
- - - 2,500
( o ) Provision for Diminution in value of Investments - - - -
15,000 - - -
( p ) Advances written off ( Net ) - - - -
9,941 - - -
(q) Sale of Equity Shares 111,213 - - -
- - - -
( r ) Refund of Loan (Refer Note 11) 35,009 - - -
- - - -
(s) Balance outstanding at the year-end
Sundry Debtors 1,114,585 - - 7,918
1,764,622 - - -
Sundry Creditors 4,020 - 30,578 -
4,312 - 14,685 -
Deposits - - - 2,500
- - - 2,500
Loans and Advances 205,978 188 - -
343,058 6,620 - 715
Other Current Assets - 17,205 - -
- 18,338 - -
Investments in Equity Refer Note 12 above
( iii ) Figures in normal font represent relates to previous year
 COMPANY ACCOUNTS 45

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year ended For the year ended
31st March, 2006 31st March, 2005

24. (a) Consumption :- Value % Value %

(i) Raw Materials
Imported 2,658,197 50.03 1,915,767 37.89
Indigenous 2,655,420 49.97 3,139,822 62.11
5,313,617 100.00 5,055,589 100.00
(ii) Stores and Spare Parts
Imported 139,875 12.29 81,317 8.84
Indigenous 998,092 87.71 838,087 91.16
1,137,967 100.00 919,404 100.00
(b) Raw Materials Consumed :- Unit Quantity Value Quantity Value
Metallic M.T. 391,773 2,160,927 361,610 2,586,301
Other Materials (individual item does
not exceed 10% of total consumption) 3,152,690 2,469,288

5,313,617 5,055,589

25. (a) Capacity and Production

For the year ended For the year ended
31st March, 2006 31st March, 2005

Class of Goods Unit Licensed Installed Production Licensed Installed Production

Capacity Capacity$ Capacity Capacity$
Wire Drawing and Allied
Machines Nos N.A. 50 23* N.A. 50 25*
Wire Rods M.T. N.A. 228,000 301,689** N.A. 228,000 290,035**
Wire Ropes, Strands
including Locked Coil
Wire Ropes M.T. N.A. 57,000 64,765*** N.A. 55,000 63,716***
Wires M.T. N.A. 71,700 69,725**** N.A. 41,700 43,998****
Pig Iron/Hot Metal M.T. N.A. 200,000 202,605 + N.A. 200,000 195,514 +
Billets M.T. N.A. 360,000 323,270 ++ N.A. 360,000 296,192 ++
Sponge Iron M.T. N.A. 100,000 98,908 +++ N.A. 100,000 46,851+++
Hydralic Machines
including Presses,Proof-
Loading Machines and
accessories Pcs. N.A. 100 54 ++++ N.A. 100 1++++
Blocks,Dies and
accessories Sets N.A. 400 8@ N.A. 400 36@
Ferrules,Slings,Fitting Pcs. N.A. 700,000 127,368@@ N.A. 700,000 112,637@@
Equipment and materials
for Prestressed Concrete
System and Bargrip
seamless Tubes for Splicing Pcs. N.A. 4,600,000 1,236,394@@@ N.A. 4,600,000 1,255,672@@@
46

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

25. (a) Capacity and Production (contd.)

For the year ended For the year ended
31st March, 2006 31st March, 2005
Class of Goods Unit Licensed Installed Production Licensed Installed Production
$ $
Capacity Capacity Capacity Capacity
Equipment and
materials for
installation, jointing
and fittings of
cables/conductors
including crimping
tools, lugs,overhead
fittings,EHV fittings,
and accessories and
cutter tools Pcs. N.A. - 26,138 @@@@ N.A. - 43 @@@@
Jelly Filled
Telecommunication
Cables LCKM N.A. 64 - N.A. 64 0.02
Bright Bar M.T. N.A. 12,000 7,498+++++ N.A. 12,000 6,519+++++
Conveyor Cord M.T. N.A. 840 1,103 N.A. 840 787
House Wire K.M. N.A. 1,680 - N.A. 1,680 4

$ As certified by the Management.

* Including internal consumption 7 Nos. (Previous Year Nil Nos. ).
** Including conversion for others 922 M.T.(Previous Year 526 M.T.) and internal consumption 129,968 M.T.(Previous Year
107,160 M.T. )
*** Including internal consumption 72 M.T. (Previous Year 12 M.T. )
**** Including conversion for others 254 M.T. (Previous Year Nil M.T. ), including internal consumption 8,177 M.T. (Previous Year
9,373 M.T.) and includes 927 M.T. acquired pursuant to a Business Transfer Agreement (Refer Note 9 above)
+ Including conversion for others 5304 M.T. (Previous year 24429 M.T.) and including internal consumption 194643 M.T.
(Previous year 172630 M.T.)
++ Including internal consumption 317,346 M.T. (Previous Year 300,009 M.T. )
+++ Including internal consumption 101,898 M.T.(Previous Year 41,017 M.T.)
++++ Including internal consumption 1 Pc. (Previous Year 1 Pc.)
+++++ Including internal consumption 14 M.T.(Previous Year 10 M.T.)
@ Including internal consumption Nil Set( Previous Year 7 Sets )
@@ Including internal consumption 1,284 Pcs. (Previous Year 35,810 Pcs. )
@@@ Including internal consumption Nil Pcs. (Previous Year 83 Pcs. )
@@@@ Including internal consumption Nil Pc. (Previous Year 1 Pc. )
 COMPANY ACCOUNTS 47

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year ended For the year ended

31st March, 2006 31st March, 2005
Unit Quantity Value Quantity Value
25. (b) Opening Stock

Wire Rods M.T. 12,021 293,681 16,768 345,077

Wire Ropes, Strands including
Locked Coil Wire Ropes M.T. 1,713 74,064 2,561 96,082
Wires M.T. 2,077 70,647 2,191 60,894
Billets M.T. 4,354 97,503 9,893 168,273
Sponge Iron M.T. 5,762 57,233 - -
Pig Iron/Hot Metal M.T. 511 6,946 3,303 32,617
Hydraulic Machines including
Presses,Proof- Loading Machines and
accessories Pcs. - - - -
Blocks,Dies and accessories Sets 16 83 15 83
Ferrules,Slings,Fittings and
accessories Pcs 6,037 190 11,508 619
Equipment and materials for Prestressed
Concrete System and Bargrip seamless
Tubes for Splicing Pcs. 37,466 5,160 53,302 3,623
Equipment and materials for installation,
jointing and fittings of cables/conductors
including crimping tools, lugs,overhead
fittings,EHV fittings, and accessories and
cutter tools Pcs. 1 3 64,909 463
Jelly Filled Telecommunication Cables LCKM - - - -
Spares/Accessories - - - 205
Product Scrap 54,216 - 74,338
Bright Bar M.T. 632 23,512 472 15,118
Conveyor Cord M.T. 13 559 7 453
House Wire K.M. - - 779 1,237
683,797 799,082
(c) Purchase of General Merchandise

Hard Coking Coal M.T. - - 26,716 198,830

Jelly Filled Telecommunication Cables KM 27.963 1,653 741.58 32,239
Miscellaneous items(individual item does
not exceed 10% of total purchase) - 7,963 - 3,278
9,616 234,347
48

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year ended For the year ended

31st March, 2006 31st March, 2005
Unit Quantity Value Quantity Value
25. (d) Closing Stock
Wire Rods M.T. 12,084 335,685 12,021 293,681
Wire Ropes,Strands including
Locked Coil Wire Ropes M.T. 1,763 78,222 1,713 74,064
Wires M.T. 3,859 141,653 2,077 70,647
Billets M.T. 9,319 210,545 4,354 97,503
Sponge Iron M.T. 772 7,760 5,762 57,233
Pig Iron/ Hot Metal M.T. 2,512 36,496 511 6,946

Hydraulic Machines including

Presses, Proof- Loading Machines and
accessories Pcs. - - - -
Blocks, Dies and accessories Sets 16 80 16 83
Ferrules, Slings,Fittings and
accessories Pcs. 9,376 270 6,037 190
Equipment and materials for Prestressed
Concrete System and Bargrip seamless
Tubes for Splicing Pcs. 38,579 6,734 37,466 5,160
Equipment and materials for installation,
jointing and fittings of cables/conductors
including crimping tools, lugs,overhead
fittings,EHV fittings, and accessories and
cutter tools Pcs. 1 3 1 3
Spares/Accessories - - - -
Product Scrap - 22,625 - 54,216
Bright Bar M.T. 932 35,002 632 23,512
Conveyor Cord M.T. - - 13 559
House Wire K.M. - - - -
875,075 683,797
 COMPANY ACCOUNTS 49

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

For the year ended For the year ended

31st March, 2006 31st March, 2005
Unit Quantity Value Quantity Value
25. (e) Turnover (Gross) :-
(i) Manufactured Items :-
Wire Drawing and Allied Machines Nos 16 29,922 25 67,502
Wire Rods * M.T. 171,675 5,843,904 187,096 6,069,613
Wire Ropes,Strands including
Locked Coil Wire Ropes M.T. 64,643 4,087,377 64,552 3,687,697
Wires M.T. 59,512 2,471,024 34,738 1,421,136
Billets M.T. 959 21,207 1,722 39,198
Sponge Iron M.T. 2,000 20,407 72 837
Pig Iron/Hot Metal M.T. 657 10,765 1,247 25,940
Hydraulic Machines including
Presses,Proof- Loading Machines and
accessories Pcs. 53 2,482 - -
Blocks, Dies and accessories Sets 8 178 28 377
Ferrules,Slings,Fittings and
accessories Pcs. 122,745 8,883 82,298 6,520
Equipment and materials for Prestressed
Concrete System and Bargrip seamless
Tubes for Splicing Pcs. 1,235,281 56,647 1,271,425 51,812
Equipment and materials for installation,
jointing and fittings of cables/conductors
including crimping tools, lugs,overhead
fittings, EHV fittings, and accessories and
cutter tools Pcs. 26,138 4,504 64,950 2,736
Jelly Filled Telecommunication Cables LCKM - - 0.02 1,676
Bright Bar M.T. 7,184 350,261 6,349 302,848
Conveyor Cord M.T. 1,116 141,449 781 104,041
House Wire K.M. - - 783 1,418
Spares/Accessories 24,153 26,946
*including converted from outside parties 939 M.T.
(previous year NIL M.T.) 13,073,163 11,810,297
(ii) General Marchandise
Jelly Filled Telecommunication Cables KM 27.963 1,683 741.58 33,687
Hard Coking Coal M.T. - - 26,716 298,717
Miscellaneous items(individual item does
not exceed 10% of total sales) 15,961 24,780
17,644 357,184
(iii) Product Scrap 167,684 193,632
(iv) Slag/Dust 69,289 41,761
(v) Service Charges 3,281 14,035
(vi) Lease Rentals 325 360
(vii) Processing Charges 36,381 106,273
(viii) DEPB/Pass Book Gain 404,069 182,274
681,029 538,335
TOTAL 13,771,836 12,705,816

Turnover represents external sales and does not include inter segment sales Rs. 3,828,036 (Previous Year Rs.2,993,376)
50

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

26. Segment Information for the year ended 31st March 2006
A. Primary Segment Reporting (by Business Segments)
I. Composition of Business Segments
Segments have been identified in accordance with the Accounting Standard on Segment Reporting (AS-17) issued by
the Institute of Chartered Accountants of India.
Details of products included in each of the above Segments are given below :
Steel : Steel Wire Rods, Pig Iron, Billets
Wire and Wire Ropes : Steel Wires, Strands, Cord, Bright Bar and Wire Ropes
Others : Jelly Filled Telecommunication Cables, Wire Drawing and Allied Machineries,
Splicing Tools, Crimping Tools , accessories etc.

II Inter Segment Transfer Pricing

Inter segment prices are normally negotiated amongst the segments with reference to the costs, market prices and business
risks, within an overall optimisation objective for the Company.
III Segment Revenues, Results and Other Information
Steel Wire and Wire Ropes Others Total of Reportable
Segment

External Sales * 5,794,254 6,431,687 126,142 12,352,083

6,422,663 5,247,002 229,052 11,898,717
Inter Segment Sales* 3,220,033 64,157 207 3,284,397
2,644,233 40,273 3,384 2,687,890
Other Income 7,438 43,375 20,282 71,095
1,830 5,236 2,831 9,897
Segment Revenues 9,021,725 6,539,220 146,630 15,707,575
9,068,726 5,292,511 235,267 14,596,504
Segment Result (PBIT) 1,468,304 638,667 10,614 2,117,585
1,299,441 448,209 9,921 1,757,571
Segment Assets 10,706,388 5,831,755 686,789 17,224,932
10,983,488 5,822,024 628,858 17,434,370
Segment Liabilities 2,743,173 736,733 61,652 3,541,558
3,504,413 597,086 95,031 4,196,530
Capital Expenditure(net) 1,107,491 249,360 464 1,357,315
678,357 139,909 3,724 821,990
Depreciation 451,596 266,284 20,337 738,217
411,094 253,686 15,088 679,868
Non cash expenses other than depreciation 2,981 1,528 74 4,583
2,465 585 2,036 5,086
* Net of excise duty
 COMPANY ACCOUNTS 51

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

IV Reconciliation of Reportable Segments with the Financial Statements

Revenues Results/Net Profit Assets Liabilities *

Total of Reportable Segments 15,707,575 2,117,585 17,224,932 3,541,558
14,596,504 1,757,571 17,434,370 4,196,530
Corporate - Unallocated ( net) 23,751 (379,597) 881,551 8,649,217
(96) (470,301) 1,007,521 9,737,621
Inter Segment Sales (3,284,397) - - -
(2,687,890) - - -
Interest (net) - (730,603) - -
(704,511) - -
Provision for taxation -Current - (85,000) - -
(50,000) - -
Provision for Fringe Benefit Tax - (12,200) - -
- - - -
Provision for taxation -Deferred - (260,544) - -
- (124,025) - -
As per Financial Statements 12,446,929 649,641 18,106,483 12,190,775
11,908,518 408,734 18,441,891 13,934,151
*Excluding Shareholders' Funds.

B. Secondary Segment Reporting (by Geographical Segments) Domestic Exports Total

Revenues (external) 9,020,149 3,403,029 12,423,178
7,278,149 4,630,465 11,908,614
Total Assets 17,224,818 114 17,224,932
17,434,203 167 17,434,370
Capital Expenditure 1,357,315 - 1,357,315
821,990 - 821,990

Figures in normal type relates to previous year

52

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

27. Lease Commitments

a) Operating Lease Commitments
The Company has entered into an operating lease agreement during the year 2001-02 for a period of fifteen years, in
connection with establishment and operation of a Plant, by the lessor, for production of gaseous oxygen to cater to the
Company's Steel Plant at Jamshedpur. The Company pays minimum lease rent and fixed as well as variable operating and
maintenance charges.
30% of lease rent, fixed and variable operation and maintenance charges will be escalated every quarter in the same
proportion as increase in Wholesale Price Index published by Reserve Bank of India in its bulletin (base period 1st August
1999).
The future minimum lease commitments of the Company are as follows:
Lease Rent Operation and Maintenance Charges
As at As at As at As at
31st March 31st March 31st March 31st March
2006 2005 2006 2005

Up to one year 25,122 25,122 13,527 13,527

More than one year and up to five years 99,035 99,035 53,326 53,326
More than five years 131,483 156,605 70,799 84,326

The above amount is exclusive of taxes and duties, variable operation and maintenance charges and escalation charges.
The Company has charged the following amount in the Profit and Loss account on account of the aforesaid lease.

For the year For the year

ended 31st March ended 31st March
2006 2005

Lease Rent 27,132 27,222

Operation and Maintenance Charges 13,527 13,527
Escalation Charges 9,234 6,033
Total 49,893 46,782

(b) The Company has entered into cancellable operating lease and transaction for leasing of accomodation for office spaces,
employees residential accommodation etc. Tenure of leases generally vary between 1 and 3 years. Terms of the lease include
operating term for renewal, increase in rent in future periods and term of cancellation. Related lease rentals aggregating
Rs.7,077 (Previous year Rs.8,783 ) have been debited to Profit and Loss Account.
 COMPANY ACCOUNTS 53

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

28. Particulars of disputed demands in respect of Income-tax, Sales Tax, Excise Duty and Customs Duty as on 31st March, 2006 which
have not been deposited are set out below :

Name of the Nature of the dues Amount Period to which the Forum where dispute is pending
Statute ( Rs. in amount related
thousand )

Central and State Taxes including 279 1986-87 Sales Tax Appellate Tribunal
Sales Tax Acts. interest 24,772 984-85, 1998-99, Deputy Commissioner of
2000-01,2001-02 Commercial Taxes
and 2002-03.

Central Excise Duty including interest 29 1999-00 Jharkhand High Court

Act, 1944 11,535 1997-98 to 2000-01, Central Excise and Service Tax
2001-02 Appellate Tribunal
91 1999-00, 2001-02 Assistant Commissioner Central Excise
3,755 1998 to 2002, 2000-01 to Commissioner (Appeals) of Central Excise
2002-03
1,782 2001-02 Joint Commissioner of Central Excise
1,367 2000-01 to 2003-04 Additional Commissioner of Central Excise

Customs Act, Dispute on Customs 1,394 1995-96, 1996-1998, 2000 Deputy Commissioner of Customs
1962 duty 757 1989-90 Central Excise and Service Tax
Appellate Tribunal
5,166 1996-97, 1998-99, 2002, Assistant Commissioner of Customs
2003
Income-tax Act, Dispute on Income tax 10,353 1999-00 Commissioner of Income-tax (Appeals)
1961 27,499 2001-02 Commissioner of Income-tax (Appeals)
54

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

29. Disclosure pursuant to SEBI's circular no SMD/POLICY/CIR-02/2003

I. Name Classification
UM Cables Limited a
Rs.96,875 b
Rs.6,878 c
Rs.131,877 d,e
Usha Siam Steel Industries Public Company Limited a
Rs.57,396 b, e,f
Rs.4,449 c
Rs.246,098 d
Usha Martin International Limited a
Rs.2,288 b, e,f
Rs.5,909 c
Rs.265,918 d
Usha Martin Americas Inc a
Rs.10,844 c
Rs.13,049 d,f
European Management and Marine Corporation Limited a
Rs.Nil b,c
Rs.6,682 d
Brunton Shaw UK Limited a
Rs.4,774 c,d
Brunton Wolf Wire Ropes FZCO. a
Rs.17,410 c,d
Brunton Shaw Americas Inc. a
Rs.385 c,d
Usha Martin Singapore Ltd. a
Rs.21 c,d

Legends to classification :-
a - denotes Subsidiaries
b - denotes Loans outstanding as at 31st March, 2006
c - denotes amount due on account of accrued interest, management service
charges and recovery of expenses outstanding as at 31st March, 2006
d - denotes maximum amount outstanding during the year ended 31st March, 2006
e - denotes no interest or interest below Section 372A of the Companies Act, 1956
f - denotes no repayment schedule or repayment beyond seven years.

II. In view of voluminous data furnishing of particulars such as name, amount outstanding at the year end and maximum amount
outstanding during the year in respect of loans and advances in the nature of loan given to employees for medical,furniture,housing,
vehicle etc. with interest rate varying from 0 - 6 per cent and repayment terms varying from 1 - 10 years is not considered
practicable. Aggregate amount of such advances and loans outstanding at the year end is Rs. 29,882 (Previous year
Rs.27,047).
 COMPANY ACCOUNTS 55

Schedules To Accounts (Rupees in Thousand)

17. NOTES ON ACCOUNTS (contd.)

30. Proceeds received upon issue of GDR's referred to in Note 2 on Schedule 1 and allotment of Equity Share Warrants referred to
in Note 10 above aggregating Rs.1251615 have been utilised during the year on overall basis as set out below :
Rs.
Capital Expenditure on Projects relating to steel manufacturing, mining, 639,858
wire & wire rope manufacturing etc.
Investment in overseas subsidiaries engaged in wire & wire rope business 150,055
GDR Issue expenses 33,348
General Corporate purpose ( repayment of borrowings ) 392,354
1,215,615
31. Provision for Dividend Tax includes Rs. Nil (Previous Year Rs.71) paid in respect of earlier year.
32. Figures for the previous year have been regrouped/rearranged wherever necessary. However, in view of amalgamation of company
as indicated in Note - 8 above and acquisition of a business unit reffered to in Note - 9 above,
Current years’ figures are not comparable with the previous year.

Signatures to Schedules ‘1’ to ‘17’

P. Jhawar Vice Chairman

R. Jhawar Managing Director
Kolkata Dr. P. Bhattacharya Jt. Managing Director
6th May, 2006 A. K. Somani Company Secretary
56

CASH FLOW STATEMENT for the year ended 31st March, 2006 (Rs. in Thousand)

For the year ended For the year ended

31st March, 2006 31st March, 2005

Rs. Rs. Rs. Rs

A. Cash flow from operating activities :
Net profit before tax and extraordinary items 1,007,385 582,759
Adjustments for :
Depreciation 760,996 702,040
Interest (Net) 730,603 704,511
Finance Charges relating to
Prepayment of Loans and Other Items 27,221 91,119
Dividend (480) (480)
Provision for Diminution in Value of
Investment no longer required written back (15,000) -
Miscellaneous Receipt
( Received from subsidiary on account of refund of Loan) (35,009) -
Profit on Sale of Long Term Investments (Net) (9,670) -
Profit on Sale of Fixed Assets (Net) (11,919) (626)
Provision for Doubtful Debts, Advances 1,500 26,936
Provision for diminution in value of Investments - 15,000
Profit on redemption of Investment - (2)
Bad Debts written off / Provision written back (Net) (8,259) 10,847
Deferred Revenue Expenditure written off 24,432 29,000
Exchange (Gain) / Loss (Net) 3,144 1,467,559 45,986 1,624,331
Operating profit before working capital changes 2,474,944 2,207,090
Increase / Decrease in :
Trade and other receivables 842,255 (914,706)
Inventories 292,169 (557,427)
Trade payables (632,032) 502,392 1,649,111 176,978
Cash generated from operations 2,977336 2,384,068
Direct taxes (including Fringe Benefit Tax) paid (137,554) (22,436)
Payment of Compensation under Voluntary Retirement Scheme (6,582) (144,136) (1,655) (24,091)
Net cash from Operating Activities 2,833,200 2,359,977

B. Cash flow from Investing Activities :

Purchase of Fixed Assets (1,303,965) (798,199)
Sale of Fixed Assets 16,439 11,877
Purchase of Investments - (753)
Investments in Subsidiaries (358,786) (2,086)
Loans and Advances to Subsidiary Companies 33,084 (32,803)
Inter Corporate Loans (Net) (7,397) (655)
Consideration for acquisition of
JCT Limited's Wire and Wire Rope Unit (115,891) -
(Note 9 on Schedule 17)
Sale/Redemption of Investments 186,389 38
Disposal of Subsidiary 112,339 -
Miscellaneous Receipt
( Received from subsidiary on account of refund of Loan ) 35,009 -
Interest received 74,988 85,748
Dividend received 480 480
Net Cash used in Investing Activities (1,32,7,311) (736,353)
Carried forward 1,505,889 1,623,624
 COMPANY ACCOUNTS 57

CASH FLOW STATEMENT for the year ended 31st March, 2006 (Rs. in Thousand)

For the year ended For the year ended

31st March, 2006 31st March, 2005

Rs. Rs. Rs. Rs

Brought forward 1,505,889 1,623,624
C. Cash flow from Financing Activities :
Proceeds from issuance of Equity Shares 1093527 -
[ Net of Share/GDR Issue Expenses Rs. 33,348 ]
Advance Received on issue of Equity Warrants 88,740 -
Capital Subsidy Received 30,000 -
Long term borrowings
(Net of finance charges relating to prepayment
of loans and other items) - Receipts / (Payment) (Net) (495,996) (574,713)
Short term borrowings - Receipts / (Payment) (Net) (1,214,396) (182,134)
Interest paid (817,114) (726,778)
Dividend paid (including tax thereon Rs.7,789;
Previous Year Rs. 3,558) (63,511) (31,788)
Net Cash used in Financing Activities (1,378,750) (1,515,413)
Net increase in cash and cash equivalents during the year 127,139 108,211
D. Effect of Foreign Exchange Differences on
Cash and Cash Equivalents 443 235
127,582 108,446
Cash and Cash Equivalents as at 31st March, 2005
[ Refer Schedule 8 to Accounts ] 389,655 281,209
Add : Acquired upon amalgamation
(Note 8 on Schedule 17 to Accounts) 252 -
389,907 281,209
Cash and Cash Equivalents as at 31st March, 2006
[ Refer Schedule 8 to Accounts ] 517,489 127,582 389,655 108,446
Notes :
1. The above Cash Flow Statement has been prepared under the indirect method as set out in the Accounting Standard
- 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India.
2. Schedules referred to above form an integral part of the Cash Flow Statement.
3. Refer Note 32 on Schedule 17 to Accounts.

This is the Cash Flow Statement referred to in our report of even date.

(P. Law)
Partner
Membership No. F 51790
For and on behalf of
PRICE WATERHOUSE P. Jhawar Vice Chairman
Chartered Accountants R. Jhawar Managing Director
Kolkata Dr. P. Bhattacharya Jt. Managing Director
6th May, 2006 A. K. Somani Company Secretary
58

Schedules To Accounts
Information pursuant to Part IV of Schedule VI of the Companies Act ,1956
Balance Sheet Abstract And Company's General Business Profile
I Registration Details
Registration No 91621 State Code 21
Balance Sheet Date 31st March 2006

II Capital raised during the year (Amount Rs. in Thousands)

Public Issue Right Issue
Nil Nil
Bonus Issue Private Placement/GDR
Nil 36,119 *
*excluding Equity Warants Rs.88,740
and securities premium Rs.1,090,756

III Position of Mobilisation and Deployment of Funds (Amount Rs. in Thousands)

Total Liabilities Total Assets
12,190,775 + 18,064,495 *
+ Net of Shareholders' Fund * Net of Miscellaneous Expenditure of Rs. 41,988
Sources of Funds * Paid-up Capital Reserves and Surplus
221,920 5,605,048

Secured Loans Unsecured Loans

6,717,748 158,367
Excluding Deferred Tax Liabilities & Equity Warrants

Application of Funds Net Fixed Assets Investments

9,542,787 1,525,755

Net Current Assets Misc. Expenditure

3,016,357 41,988

Accumulated Losses
Nil

IV Performance of Company (Amount Rs. in Thousands)

Turnover (Gross) Total Expenditure
13,771,836 11,439,544
+ – Profit/Loss before Tax + – Profit/Loss after Tax
1,007,385 649,641
Earning per Share in Rs. Dividend rate %
Basic 16.20 55
Diluted 16.06
V Generic Names of Three Principal Products/Services of Company (as per monetary terms)
Product Description : Item Code No. (ITC Code.)
i) Wire Ropes,Strands including Locked Coil Wire Rope 7312
ii) Wires 7217
iii) Wire Rods 7213
P. Jhawar Vice Chairman
R. Jhawar Managing Director
Kolkata Dr. P. Bhattacharya Jt. Managing Director
6th May, 2006 A. K. Somani Company Secretary
Statement giving financial information of subsidiary companies for the year ended 31st March, 2006 as required in the approval
letter received from the Ministry of Company Affairs , New Delhi, under Section 212(8) of the Companies Act, 1956.
( Rupees in Thousand)

Sl. No. Particulars UM Cables Usha Martin Usha Martin Usha Martin UK Usha Martin European EMM Caspian EMM Kazakhstan Usha Siam Steel Brunton Shaw Usha Martin Brunton Wolf Brunton Shaw
Limited International Americans Limited* Australia Pty Managment Limited* Limited* Industries Public UK Limited* Singapore Pte. Wire Ropes Americas Inc. $
Limited* Inc $ Limited # and Marine (Note 5 Company Ltd. + FZCO=
Corporation Ltd. below) Limited @

Currency INR GBP USD GBP AUS $ GBP GBP GBP Baht GBP SGD AED USD

Exchange rate
as on 31st March, 2006 77.86 44.62 77.86 31.97 77.86 77.86 77.86 1.15 77.86 27.61 12.15 44.62

1 Share Capital 271,296.60 570,432.57 31,234.00 299,761.00 6,394.00 93,432.00 0.16 0.08 155,130.34 124,576.00 27,610.00 206,550.00 147,246.00

2 Reserves and Surplus 651.70 146,234.39 (101,708.66) 109,395.25 4,215.03) – – – 66,445.19 (7,295.01) 44,100.76 49,355.17 (306.34)

3 Liabilities (Note 6 below) 956,358.17 306,017.83 519,276.49 1,309,780.15 41,717.79 – – – 1,139,886.70 – 369,682.44 335,458.18 5,988.51

4 Total Liabilities 1,228,306.47 1,022,684.79 448,801.83 1,718,936.40 43,896.76 93,432.00 0.16 0.08 1,361,462.23 117,280.99 441,393.20 591,363.35 152,928.17

5 Total Assets 1,228,306.47 1,022,684.79 448,801.83 1,718,936.40 43,896.76 93,432.00 0.16 0.08 1,361,462.23 117,280.99 441,393.20 591,363.35 152,928.17

6 Investments - Long Term

(excluding investments
in subsidiaries) – – – – – – – – – – – – –

7 Turnover (Net) 1,870,070.69 – 905,661.42 1,528,637.92 17,272.48 700,010.22 172,610.71 – 1,503,243.34 275,921.90 633,606.15 484,614.44 –

8 Profit/(Loss) before Taxation 51,165.13 143,507.81 16,757.44 87,675.19 (4,215.03) 37,222.22 12,644.15 – 17,747.46 12,363.00 30,625.45 23,726.35 (306.34)

9 Provision for Taxation 13,166.70 – – 21,123.34 – 6,975.01 4,266.03 – – – 5,630.09 – –

10 Profit/(Loss) after Taxation 37,998.43 143,507.81 16,757.44 66,551.85 (4,215.03) 30,247.21 8,378.13 – 17,747.46 12,363.00 24,995.36 23,726.35 (306.34)

11 Proposed Dividend – – – – – – – – – – – 16,142.51 –

* Converted into Indian Rupees at the exchange rate, 1 GBP = Rs.77.86 as on 31st March, 2006
$ Converted into Indian Rupees at the exchange rate, 1 USD = Rs.44.62 as on 31st March, 2006
# Converted into Indian Rupees at the exchange rate, 1 Australian Dollar = Rs.31.97 as on 31st March, 2006
@ Converted into Indian Rupees at the exchange rate, 1 Thai Baht = Rs.1.15 as on 31st March, 2006
+ Converted into Indian Rupees at the exchange rate, 1 Singapore Dollar = Rs.27.61 as on 31st March, 2006
= Converted into Indian Rupees at the exchange rate, 1 Arab Emirates Dirham = Rs.12.15 as on 31st March, 2006
Notes :
(1) The above financial information of the subsidiaries is for the year ended 31st March, 2006 except Brunton Shaw Americas Inc, which is for the period from 25th January, 2006 to 31st March, 2006 (first
financial year).
(2) UMICOR Africa (Pty) Limited, a wholly owned subsidiary has not been considered in the above statement since the Board of Directors of the Company has decided to initiate liquidation proceeding for
winding up of the said subsidiary.
(3) During the year, Usha Martin Scandinavia A/S, a wholly owned subsidiary of Usha Martin International Limited was disposed off and hence not included in the above statement.
(4) During the year, pursuant to the Scheme of Amalgamation sanctioned by the Hon'ble High Court at Calcutta on 12th April 2006 under the provisions of the Companies Act, 1956, the undertaking of
Usha Martin Holdings Limited, the transferor company (a wholly owned subsidiary of the Company) stand transferred to and vested in the Company with effect from 1st April 2005.
(5) During the financial year the EMM Kazakhstan Limited has not traded and has received no income and incurred no expenditure and consequently the Company has made neither a profit nor a loss.
(6) Total Liabilities include Secured Loans, Unsecured Loans, Deferred Tax Liabilities and Current Liabilities.
(7) The annual accounts of the above subsidiary companies will be made available to the shareholders and also kept for inspection at the Registered Office of the Company.

Place : Kolkata (P. Jhawar) (R. Jhawar)

Date : 6th May, 2006 Vice Chairman Managing Director
SUBSIDIARY COMPANIES
59
60

CONSOLIDATED BALANCE SHEET OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

as at 31st March, 2006 (Rupees in Thousand)

Schedule 31st March, 31st March,

Reference 2006 2005

SOURCES OF FUNDS
Shareholders' Funds
Capital 1 221,920 185,801
Equity Warrants 88,740
[ Note 8 on Schedule 16 ] -
Reserves and Surplus 2 5,791,406 6,102,066 4,026,044 4,211,845
Minority Interest 107,094 77,650
Loan Funds 3
Secured Loans 8,323,595 9,455,412
Unsecured Loans 327,540 8,651,135 1,017,079 10,472,491
Deferred Tax Liability (Net) [ Note 15 on Schedule 16] 1,367,168 1,105,686

16,227,463 15,867,672
APPLICATION OF FUNDS
Fixed Assets 4
Gross Block 18,587,680 17,112,782
Less: Depreciation 7,159,878 6,289,526
Impairment Loss 210,887 198,363
Net Block 11,216,915 10,624,893
Capital Work-in-Progress 730,787 11,947,702 445,218 11,070,111
Investments 5 3,786 445,187
Current Assets, Loans and Advances
Inventories 6 4,442,905 4,827,028
Sundry Debtors 7 2,635,217 2,375,414
Cash and Bank Balances 8 676,568 492,824
Other Current Assets 9 254,672 212,058
Loans and Advances 10 1,564,211 1,845,302
Less: 9,573,573 9,752,626
Current Liabilities and Provisions 11
Liabilities
Provisions 5,098,394 5,273,325
241,200 187,153
Net Current Assets 5,339,594 4,233,979 5,460,478 4,292,148
Miscellaneous Expenditure
(to the extent not written off or adjusted)
Deferred Revenue Expenditure [ Note 10 on Schedule 16] 41,996 60,226
16,227,463 15,867,672
Notes on Accounts 16

This is the Consolidated Balance Sheet referred to Schedules referred to above form an integral
in our report of even date part of the Consolidated Balance Sheet

( P. Law )
Partner
P. Jhawar Vice Chairman
Membership No F 51790
For and on behalf of R. Jhawar Managing Director
PRICE WATERHOUSE
Chartered Accountants Dr. P. Bhattacharya Jt. Managing Director
Kolkata
6th May, 2006 A. K. Somani Company Secretary
 CONSOLIDATED ACCOUNTS 61

CONSOLIDATED PROFIT AND LOSS ACCOUNT OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES
for the year ended 31st March, 2006 (Rupees in Thousand)

Schedule
Reference 2005-06 2004-2005
INCOME
Turnover (Gross) 19,693,111 16,484,765
Less : Excise Duty 1,673,502 982,200
Turnover (Net) 18,019,609 15,502,565
Other Income 12 107,337 25,845
18,126,946 15,528,410
EXPENDITURE
Purchase of General Merchandise 15,076 368,767
Raw Materials Consumed 13 8,865,418 7,195,409
(Increase)/Decrease in Stock-in-Trade 14 (155,268) (184,204)
Manufacturing, Selling and Administrative Expenses 15 6,323,883 5,845,218
Depreciation and Amortisation 964,785
Less : Transferred from Fixed Assets Revaluation Reserve 5,213 959,572 872,987
[ Note 19 (c) on Schedule 16 ]
Impairment Loss (Note 20 on Schedule 16 ) 11,959 -
Interest ( Note 9 on Schedule 16) 909,885 859,549
Adjustments for Items Capitalised and
Departmental Orders for own consumption (68,337) (89,485)
16,862,188 14,868,241
1,264,758 660,169
NON RECURRING ITEM
Gain on Debt Restructuring - 46,672
PROFIT BEFORE TAXATION, SHARE OF EARNINGS FROM
ASSOCIATES AND MINORITY INTEREST 1,264,758 706,841
Taxation:
Current Tax [including Rs.Nil (Previous year Rs.448) in respect of earlier year] 133,543 80,828
Fringe Benefit Tax 12,602 -
Deferred Tax 264,425 122,278
410,570 203,106

PROFIT AFTER TAXATION AND BEFORE SHARE OF EARNINGS

FROM ASSOCIATES AND MINORITY INTEREST 854,188 503,735
Share of earnings from Associates - 2,555
PROFIT AFTER TAXATION AND BEFORE MINORITY INTEREST 854,188 506,290
Minority Interest (10,772) (5,469)
PROFIT AFTER TAXATION AND MINORITY INTEREST 843,416 500,821
Profit brought forward from Previous year 225,344 92,920
Transfer from Debentures Redemption Reserve 5,000 -
Adjustment arising on amalgamation [ Refer Note 6(b) on Schedule 16 ] 15,115 -
Adjustment on dilution of control in a subsidiary ( Refer Note 22 on Schedule 16) 3,728 -
PROFIT AVAILABLE FOR APPROPRIATIONS 1,092,603 593,741
APPROPRIATIONS
Transfer to Debenture Redemption Reserve - 5,000
Transfer to General Reserve 500,000 300,000
Proposed Dividend on Equity Shares 121,683 55,537
Provision for Dividend Tax (Note 21 on Schedule 16) 17,066 7,860
Balance Carried to Balance Sheet 453,854 225,344
Notes on Accounts 16 1,092,603 593,741
Basic Earning per Equity Share of Rs.5/- each Rs. 21.03
Diluted Earning per Equity Share of Rs.5/- each Rs. 13.53
(Note 11 on Schedule 16) 20.85 13.53
This is the Consolidated Profit and Loss Account referred Schedules referred to above form an integral part
to in our report of even date of the Consolidated Profit and Loss Account
( P. Law ) P. Jhawar Vice Chairman
Partner
Membership No F 51790 R. Jhawar Managing Director
For and on behalf of
PRICE WATERHOUSE Dr. P. Bhattacharya Jt. Managing Director
Chartered Accountants
Kolkata A. K. Somani Company Secretary
62

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Rupees in Thousand)

31st March, 31st March,

2006 2005
1. SHARE CAPITAL
Authorised
100,000,000 Equity Shares of Rs.5/- each 500,000 500,000
10,000,000 Redeemable Cumulative Preference Shares of Rs.50/- each 500,000 500,000
1,000,000 1,000,000
Issued, Subscribed and Paid-up
44,248,356 (Previous Year 37,024,593) Equity Shares of Rs. 5/
each fully paid up (Note below)] 221,242 185,123
Add:Shares Forfeited 678 221,920 678 185,801
221,920 185,801

Note :
During the year the Parent Company has issued and allotted 7,223,763 GDRs, each representing one fully paid up Equity
Shares of Rs.5/- each at a premium of Rs.151/-(Aggregate Offer Price US $ 3.4608 per GDR ) per GDR, ranking pari passu
in all respectwith the existing Equity Shares.

As At 31st Additions Transfer/ As At 31st

March, 2005 during the Adjustments March, 2006
year during the year

2. RESERVES AND SURPLUS

Capital Reserve 6,911 30,000 - 36,911

[ Note (a) ] below
Capital Redemption Reserve 228,500 - - 228,500
Fixed Assets Revaluation Reserve 26,280 257,425 10,104 273,601
[ Note (b) ] below ]
Share Premium Account 2,119,051 1,090,756 31,044 3,178,763
[ Note (c) ] below ]
Debenture Redemption Reserve 811,050 - 5,000 806,050
General Reserve 730,948 500,000 317,495 913,453
[ Note (d) ] below ]
Foreign Currency Translation Adjustment Account (122,040) 22,314 - (99,726)
Profit and Loss Account 225,344 453,854 225,344 453,854
4,026,044 2,354,349 588,987 5,791,406

Notes :
(a) Represents Capital Investment Incentive Subsidy received during the year.
(b) Comprises adjustments on account of charge in Minority Interest of Rs.4,891 upon dilution of Group's interest in a Subsidiary
(Refer Note 22 onSchedule 16) and withdrawal of Rs.5,213 on account of depreciation on the amount added on revaluation.
[Refer Note 19 (c) on Schedule 16]
(c) Represents adjustments of Share/ GDR Issue Expenses Rs.33,348 (Schedule 15), after netting off tax effect.
(d) Refer Note 6 on Schedule 16
 CONSOLIDATED ACCOUNTS 63

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

31st March, 31st March,

3. LOANS 2006 2005

Secured Loans

Debentures
600,000 9% Secured Redeemable Non-convertible Debentures of Rs.33.50 - 20,100
each (Redeemed during the year )
500,000 9% Secured Redeemable Non-convertible Debentures of Rs.66.67/-
each (Previous Year Rs.100/- each) 33,333 50,000

Above Debentures are redeemable in two equal annual instalments

on 14th November, 2006 and 14th November, 2007 respectively

500,000 9% Secured Redeemable Non-convertible Debentures of Rs.33.33 - 16,667

each (Redeemed during the year )

Term Loans From -

Financial Institution - Foreign Currency Loan 447,241 1,556,260
Banks
Rupee Loans 3,493,233 3,143,734
Foreign Currency Loans 3,206,618 2,576,883
Interest Free Sales Tax Loan
from a State Government 144,747 191,329
Vehicles Loans from Banks 3,547 5,727
Working Capital Loans from
Financial Institutions
Rupee Loan - 100,000
Foreign Currency Loan 65,133 418,810
Banks
Rupee Loan 481,498 321,845
Foreign Currency Loans 448,122 1,053,920
Interest accrued and due on above 123 137
8,323,595 9,455,412
Unsecured Loans

Fixed Deposits 157,375 295,861

[Repayable within one year Rs.105,040 ( Previous Year Rs.143,260)]
Interest free Sales Tax Loan from a State Financial Institution 992 1,488
Loans from
Bodies Coporate(Short Term )
Rupee Loan - 32,500
Foreign Currency Loans 16,996 6,125
Banks (Short Term )
Rupee Loan - 299,932
Foreign Currency Loans 32,045 31,685
Banks (Long Term ) - Rupee Loan - 300,000
Financial Institution - Foreign Currency Loan 120,132 49,488
327,540 1,017,079

8,651,135 10,472,491
 64
(Rupees in Thousand)
4 . FIXED ASSETS
GROSS BLOCK - at Cost / Valuation DEPRECIATION AND AMORTISATION IMPAIRMENT LOSS NET BLOCK
As on 31st Additions Sales / As on 31st As on 31st For the On Items Sold / Total up to As on 1st As on 31st As on 31st As on 31st
March, Consequent during the Adjustments March, March, year Adjusted 31st April, March, March, March,
2005 to acquisition year during the 2006 2005 during the March, 2005 2006 2006 2005
year year 2006
[Note (viii) below] [Note (iv) below] [Note (v) below] [Note (vi) below]
A. Tangible Assets

Land and Site Development

Freehold 245,478 17,971 14,746 (3,438) 281,633 - - - - - - 281,633 245,478

Leasehold 148,077 - - - 148,077 6,570 840 - 7,410 - - 140,667 141,507
SCHEDULES TO ACCOUNTS (Contd.)

Mining Lease and Development - - 39,061 - 39,061 - 487 - 487 - - 38,574 -

Buildings 2,326,187 19,716 223,306 20,159 2,549,050 477,606 77,639 10,294 544,951 - 853 2,003,246 1,848,581
Plant and Machinery 12,612,241 13,543 1,091,981 80,376 13,637,389 5,309,232 787,723 71,993 6,024,962 188,024 199,695 7,412,732 7,114,985
Railway Sidings - - 144,097 - 144,097 - 18 - 18 - - 144,079 -
Electrical Installation 647,662 255 2,669 - 650,586 194,874 43,781 - 238,655 - - 411,931 452,788
Water Treatment and Supply Plant 153,985 - - - 153,985 52,468 5,698 - 58,166 - - 95,819 101,517
Office Equipment 95,054 - 6,049 742 100,361 63,170 8,707 583 71,294 - - 29,067 31,884
Furniture and Fixtures 110,586 152 7,734 2,211 116,261 76,118 12,544 1,890 86,772 - - 29,489 34,468
Vehicles 114,585 1,363 15,761 12,320 119,389 56,583 11,264 9,673 58,174 - - 61,215 58,002
16,453,855 53,000 1,545,404 112,370 17,939,889 6,236,621 948,701 94,433 7,090,889 188,024 200,548 10,648,452 10,029,210

B. Intangible Assets

Goodwill

Arising on Consolidation 574,607 - - 11,136 563,471 - - - - 10,339 10,339 553,132 564,268

[Note (x) below]
Others 13,297 - - - 13,297 11,418 1,879 - 13,297 - - - 1,879
Computer Softwares (Acquired) 65,389 - - - 65,389 39,233 13,078 - 52,311 - - 13,078 26,156
Technical Know-how 5,634 - - - 5,634 2,254 1,127 - 3,381 - - 2,253 3,380
658,927 - - 11,136 647,791 52,905 16,084 - 68,989 10,339 10,339 568,463 595,683

Capital Work-in-progress 730,787 445,218

17,112,782 53,000 1,545,404 123,506 18,587,680 6,289,526 964,785 94,433 7,159,878 198,363 210,887 11,947,702 11,070,111
Previous Year 15,666,079 - 1,472,668 25,965 17,112,782 5,446,254 872,987 29,715 6,289,526 - 198,363
[Note (vii) below]
CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES
4 . FIXED ASSETS (Contd.) (Rupees in Thousand)
Notes :
(i) Land and Buildings include Rs.87,193 (Previous Year Rs.86,038) against which Deed of Conveyance is under execution.
(ii) Assets given on operating leases are set out below :
Gross Block Depreciation for the year Accumulated Depreciation Impairment Loss
As on 31st As on 31st Total up to Total up to As on 31st As on 31st
March, March, 31st March, 31st March, March, March,
2006 2005 2005-06 2004-05 2006 2005 2006 2005
Land 7,913 7,913 - - - - - -
Buildings 24,828 24,828 829 829 9,240 8,411 - -
32,741 32,741 829 829 9,240 8,411 - -
(iii) The net book value of the Group's fixed assets include Rs.53,303 (Previous Year Rs.33,465) in respect of assets held under finance leases and hire purchase contracts. SCHEDULES TO ACCOUNTS (Contd.)
(iv) Includes Rs.94,517 ( Previous Year net of Rs.155,972 ) (Net) being adjustment in foreign currency term loans arising from change of exchange rate.
(v) Net of Rs.2,999 (Net) [Previous Year Rs.47,763 (Net)] on account of foreign exchange adjustment.
(vi) Net of Rs. 11,128 (Net) [Previous Year Rs.7,915 (Net)] on account of foreign exchange adjustment.
(vii) Refer Note 20 on Schedule 16.
(viii) Refer Note 7 on Schedule 16.
(ix) The year end gross block of the following assets includes the carrying amounts determined on the basis of valuation as indicated in Note 19 on Schedule 16 :
Assets As on 31st March, 2006 As on 31st March, 2005
Indian Rupees Thai Baht Indian Rupees Great Britain Pound Total Indian Rupees Indian Rupees Thai Baht Indian Rupees Great Britain Pound Total Indian Rupees
(Thousand) (Thousand) (Thousand) (Thousand) (Thousand) (Thousand) (Thousand) (Thousand) (Thousand) (Thousand)
Land and Site Development 137,751 120,000 - - 137,751 134,168 120,000 - - 134,168
Buildings 164,221 143,058 169,061 2,171 333,282 - - - - -
Plant and Machinery 1,159,350 1,009,950 399,510 5,131 1,558,860 - - - - -
1,461,322 1,273,008 568,571 7,302 2,029,893 134,168 120,000 - - 134,168
(x) Refer Note 2 (a) and Note 22 on Schedule 16.
CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED ACCOUNTS
65
66

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

31st March,2006 31st March,2005

5. INVESTMENTS
- At Cost or Under
Long Term
Unquoted
Preference Shares in a company ( Refer Note 23 on Schedule 16 ) 2,785 305,500
Equity Shares in Associate Company ( Refer Note below ) - 138,686
Ordinary Shares in a subsidiary company [ Refer Note 2(b) on Schedule 16 ] - -
Others 1,001 1,001
3,786 445,187
Note :
Investment in Associate comprises :

Group's Share in the Net Assets on acquisition 102,097 102,097

Add : Goodwill arising on acquisition 17,903 17,903
Cost of Investment 120,000 120,000
Add : Group Share in retained earnings
( Net of Group's share in dividend distributed ) 18,206 18,686
138,206 138,686
Less : Adjustment on disposal during the year
[ Refer Note 3(a) on Schedule 16 ] 138,206 -
- 138,686

6. INVENTORIES
Stores and Spare Parts 282,035 245,507
Loose Tools 127,695 92,157
Raw Materials 959,030 1,134,594
Goods-in-Transit 388,219 1,038,463
Partly Finished Products 593,452 400,111

Stock-in-Trade
Finished Products 2,081,830 1,859,213
Scrap 25,617 56,785
General Merchandise 198 198
4,458,076 4,827,028
Deduct : Provision for slow moving items and
diminution in realisable value 15,171 -
4,442,905 4,827,028
 CONSOLIDATED ACCOUNTS 67

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

31st March,2006 31st March,2005

7. SUNDRY DEBTORS
Unsecured -
Exceeding six months -
Considered Good 238,985 364,681
Considered Doubtful 86,204 86,878
325,189 451,559
Others -
Considered Good 2,396,232 2,010,733
2,721,421 2,462,292
Less : Provision for Doubtful Debts 86,204 86,878
2,635,217 2,375,414

8. CASH AND BANK BALANCES

Cash in hand [ including Drafts and Cheques of Rs.5,367 :
( Previous Year Rs.232 ) ] 10,981 3,377
Remittances-in-transit 7,333 10,828
Balances with Banks ( Note below ) 658,254 478,619
676,568 492,824

Note : Includes balances held as / under :

Collateral for issuing Bank Guarantee 312 1,033
Unpaid Dividend Accounts 2,797 2,982
Rule 3 A of the Companies (Acceptance of Deposit) Rules, 1975 50,556 38,116
53,665 42,131

9. OTHER CURRENT ASSETS

Unsecured -
87,533, 6.6% Tax Free ARS Bonds of Rs. 100/- each issued by the
Administrator of the Specified Undertaking of the Unit Trust of India 8,753 8,753
[Under Rule 3A of the Companies (Acceptance of Deposits) Rules,1975]

Miscellaneous Deposits 245,552 203,031

Others (Refer Note 18 on Schedule 16) 3,559 3,466

31st March, 31st March,

2006 2005
Note :
Considered Good 254,672 212,058
Considered Doubtful 3,192 3,192
257,864 215,250
257,864 215,250

Less : Provision for Doubtful Miscellaneous Deposits 3,192 3,192

254,672 212,058
68

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

31st March,2006 31st March,2005

10. LOANS AND ADVANCES
Unsecured-
Advances recoverable in cash or in kind or
for value to be received 1,323,216 1,724,284

Balance with Central Excise and Other Government Authorities 201,314 88,971

Advance against Purchase of Land 42,109 42,109

Inter Corporate Loans 20,063 12,666

Accrued Interest 36,587 36,350

31st March, 31st March,

2006 2005
Note :
Considered Good 1,564,211 1,845,302
Considered Doubtful 59,078 59,078
1,623,289 1,904,380
1,623,289 1,904,380
Less : Provision for Doubtful Advances 59,078 59,078
1,564,211 1,845,302

11. CURRENT LIABILITIES AND PROVISIONS

Liabilities
Acceptances 2,574,536 2,990,368
Sundry Creditors 2,319,926 2,044,490
Sundry Advances from Customers 82,922 77,534
Deposits (includes Rs.24,500 ; Previous Year Rs.37,041
for Assets given on Lease) 40,814 52,026
Unpaid Dividend 2,797 2,982
Interest accrued but not due on Loans 73,426 100,160
Interest payable on Fixed Deposits and Debentures
(Unclaimed Warrants issued but not encashed) 3,973 5,765
5,098,394 5,273,325
Provisions
Current Taxation (Net) 102,451 123,827
Proposed Dividend
On Equity Shares 121,683 55,537
Tax on Dividends 17,066 7,789
241,200 187,153
5,339,594 5,460,478
 CONSOLIDATED ACCOUNTS 69

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

2005-2006 2004-2005

12. OTHER INCOME

Profit on Sale of Long Term Investment - 14
Profit on disposal of a Subsidiary ( Refer Note 24 on Schedule 16 ) 20,932 -
Liabilities no longer required written back 12,448 2,952
[ including Provision for doubtful debts and deposits written back Rs. Nil ;
(Previous Year Rs. 2,387) ]

Profit on Sale of Fixed Assets (Net) 31,818 6,166

Claims Received 10,097 1,284
Miscellaneous Income 32,042 15,429
107,337 25,845

13. RAW MATERIALS CONSUMED

Opening Stock
Raw Materials 1,134,594 629,788
Partly Finished Products 400,111 366,735
1,534,705 996,523
Acquired pursuant to a Business Transfer Agreement @

Raw Materials 1,411

Partly Finished Products 20,030 21,441 -
Add : Purchases 8,861,754 7,733,591
10,417,900 8,730,114
Deduct: Closing Stock
Raw Materials 959,030 1,134,594
Partly Finished Products 593,452 400,111
8,865,418 7,195,409
@ Refer Note 7 on Schedule 16

14. (INCREASE)/DECREASE IN STOCK-IN-TRADE

Opening Stock 1,916,196 1,731,992
Acquired pursuant to a Business Transfer Agreement @ 36,181 -
1,952,377 1,731,992
Deduct : Closing Stock 2,107,645 1,916,196
(155,268) (184,204)

@ Refer Note 7 on Schedule 16

70

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

15. MANUFACTURING, SELLING AND 2005-2006 2004-2005

ADMINISTRATIVE EXPENSES

Salaries, Wages and Bonus 1,039,224 960,628

Contribution to Provident and Family Pension Funds 43,736 42,476
Contribution to Superannuation and Gratuity Funds 70,609 51,922
Workmen and Staff Welfare Expenses 155,809 148,076
Consumption of Stores and Spare Parts 997,802 820,447
Power and Fuel 1,304,741 1,096,079
Repairs and Maintenance
Buildings (Net) 50,538 44,885
Plant and Machinery 268,475 206,349
Others 15,614 8,962
Rent 77,387 67,638
Hire Charges/Lease Rentals of Plant and Machinery 12,120 4,675
Rates and Taxes 10,687 11,154
Insurance 45,123 50,064
Commission to Selling Agents 57,051 71,856
Freight, Transport and Delivery 932,999 1,066,858
Directors' Remuneration ( excluding perquisites and
Contribution to Provident , Superannuation and
Gratuity Funds included in other heads) 100,800 86,042
Travelling Expenses 61,875 74,067
Processing Charges 54,052 45,239
Brokerage and Discount on Sales 235,691 185,352
Adjustments arising on exclusion of a subsidiary company
[Refer Note 2(b) on Schedule 16] 11,904 -
Loss on disposal of investment in an associate company
[ Refer Note 3(a) on Schedule 16 ] 9,662 -
Finance Charges relating to Prepayment of Loans and Other Items 27,221 97,098
Bad Debts and Advances written off 21,536 189,021
Less : Written back of Provision from Doubtful Debts / Advances 7,224 14,312 163,656 25,365
Share / GDR Issue Expenses 33,348 -
Less : Set off against Securities Premium Account ( Refer Schedule 2 ) 33,348 - - -
Exchange Loss/ (Gain) (Net) 98,145 127,047
Provisions for Doubtful Debts and Advances (Net) 6,550 28,316
Provisions for slow moving items and diminution in realisable value 15,171 -
Deferred Revenue Expenditure Written off 24,800 29,623
Excise Duty on Stocks, Replacement etc. 57,900 39,282
Miscellaneous Expenses (Net) 523,885 455,718
6,323,883 5,845,218
 71
CONSOLIDATED ACCOUNTS

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS

1. Significant Accounting Policies

a) FIXED ASSETS
Fixed Assets ( comprising both tangible and intangible items ) are stated at cost other than certain classes of assets
of subsidiary companies which are stated at valuation (Refer Note 19 below). Cost comprises cost of acquisition,
manufacture and subsequent improvements thereto including taxes, duties, freight and other incidental expenses
related to acquisition and installation. Preoperative expenses, where appropriate, are capitalised till the commercial
use of the assets.

b) DEPRECIATION
i) Depreciation ( including amortisation ) is provided under "Straight Line Method" at the rates specified in Schedule
XIV to the Companies Act, 1956 other than the following :

- Certain items of Plant and Machinery - 20%

- Computer Softwares - 20%

In respect of assets existing as on 16th December, 1993, the specified period has been recomputed in terms
of the Notification No.GSR 756E dated 16th December, 1993 read with Circular No.14/93 dated 20th
December, 1993 with respect to revised rates and depreciation has been provided by allocating net book
value of fixed assets as at the beginning of the year over the remaining recomputed lives of respective assets.

ii) Depreciation on Assets given on Lease is provided under "Straight Line Method" at the rates specified in
Schedule XIV to the Companies Act, 1956 (as amended) or at the rates resulting in amortisation of the value
of respective assets over the primary lease period, whichever is higher.

iii) Leasehold Land is amortised over the tenure of respective leases.

iv) Mining Lease and Development is amortised over the tenure of lease or estimated useful life of the mine, whichever
is shorter.

v) No depreciation is provided on assets which are being used for trial run.

vi) Certain Plants are considered to be continuous process plant based on technical evaluation.

vii) In case of certain subsidiaries depreciation is provided under "Reducing Balance Method" and/or "Straight Line
Method" at the following rates which are different from those applied by the Parent Company:

Class of Assets Reducing Balance Method Straight Line Method

Land and Site Development - Leasehold 20%
Buildings 20% 4% - 5% , 10%
Plant and Machinery 10% - 25% 7% - 10% , 20%
Furniture and Fittings 10% - 25% 10%, 15% , 25%
Office Equipments 10% - 25% 10%-12.5%, 25%, 100%
Vehicles 25% 10% - 25%

c) CAPITAL WORK-IN-PROGRESS
These are stated at cost and inclusive of preoperative expenses, project development expenses pending allocation
and assets-in-transit.

d) IMPAIRMENT LOSS
An impairment loss is recognised wherever the carrying amount of the fixed assets exceeds the recoverable amount
i.e. the higher of the assets' net selling price and value in use.
72

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

1. Significant Accounting Policies (contd.)

e) INVESTMENTS
Current investments i.e. investments which are expected to be liquidated within one year are treated as Current Assets
and are valued at lower of cost and net realisable value. Long term investments are stated at cost or under and
diminution in value, other than temporary, is written down/provided for.

f) INVENTORIES
Inventories other than scrap are valued at lower of cost and estimated net realisable value. Cost is determined on
Weighted Average Basis. Scrap is valued at estimated realisable value.

g) TRANSACTION IN FOREIGN CURRENCIES

Transactions in Foreign currency outstanding at the Balance Sheet date (i.e. monetary items) are accounted for
at the contracted rate when covered by forward contracts and at exchange rates prevailing on the Balance Sheet date
in case of others. Foreign currency non-monetary items carried in terms of historical cost are reported using the
exchange rate at the date of the transactions. Exchange differences are dealt with in the Profit and Loss Account,
other than those relating to acquisition of Fixed Assets which are capitalised. Such capitalisation is restricted to only
acquisition of fixed assets in India from a country outside India in case related foreign currency transactions are entered
into on/ after 1st April, 2004. In case of a subsidiary, the capitalisation of exchange differences is discontinued after
the related assets are ready for commercial operation.

h) RETIREMENT BENEFITS
Contributions payable in keeping with Defined Contribution schemes are funded and recognised as year's expenditure,
where applicable. Contributions under Defined Benefit schemes, as determined on the basis of actuarial valuation, are
also funded and recognised as year's expenditure. Provision is also made for Leave Encashment based on actuarial
valuation.

i) REVENUE RECOGNITION
Income and Expenditure are recognised on accrual basis unless otherwise stated.

Revenue is recognised on completion of sale of goods, rendering of services and use of the Company's resources by
third parties. Sales are recorded net of trade discount, sales return, rebates and sales taxes but including excise duties
and export incentives.

Dividend income on investments is accounted for when the right to receive the payment is established.

j) BORROWING COST
Borrowing Cost attributable to the acquisition and construction of qualifying assets are added to the cost up to the date
when such assets are ready for their intended use. Other borrowing costs are recognised as expenses in the period in
which these are incurred.

k) DEFERRED REVENUE EXPENDITURE

Compensation under Voluntary Retirement Schemes is amortised over a period ( not exceeding five years following the
year in which it is incurred ) over which the benefits are estimated to accrue.

Other items incurred prior to 1st April, 2003 continue to be written off over the period during which benefits are estimated
to accrue.

l) RESEARCH AND DEVELOPMENT EXPENDITURE

Revenue expenditure on Research and Development (R & D) is charged in the year in which it is incurred. Fixed assets
for R & D are capitalised.

m) GOVERNMENT GRANTS
Government grants of the nature of promoters' contribution are credited to Capital Reserve.
 CONSOLIDATED ACCOUNTS 73

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

1. Significant Accounting Policies (contd.)

Government grants related to specific fixed asset are deducted from gross values of related assets in arriving at their
book values.
Government grants related to revenue are recognised on a systematic basis in the Profit and Loss Account over the
periods necessary to match them with their related costs.

n) TAXATION
Current Tax in respect of taxable income is provided for the year based on applicable tax rates and laws. Deferred
tax is recognised subject to the consideration of prudence in respect of deferred tax assets, on timing differences,
being the difference between taxable income and accounting income that originate in one period and are capable
of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or
substantively enacted by the Balance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to re-
assess realisation.

Fringe Benefit Tax is accounted for based on the estimated fringe benefits for the period as per the related provisions
of the Income-tax Act, 1961.

o) PROVISION AND CONTINGENT LIABILITIES

The Group recognises a provision when there is a present obligation as a result of a past event that probably requires
an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a
contingent liability is made when there is a possible obligation or a present obligation that may, but probably will
not, require an outflow of resources or there is a present obligation, reliable estimate of the amount of which cannot
be made. Where there is a possible obligation or a present obligation and the likelihood of outflow of resources is
remote, no provision or disclosure for contingent liability is made.

p) PRIOR PERIOD AND EXTRAORDINARY ITEMS AND CHANGES IN ACCOUNTING POLICIES having material
impact on the financial affairs of the Group are disclosed.

q) MATERIAL EVENTS occurring after the Balance Sheet date are taken into cognisance.

r) CONSOLIDATION
i) Consolidated Financial Statements relate to Usha Martin Limited, the Parent Company and its subsidiaries
(the Group). The Consolidated Financial Statements are in conformity with the Accounting Standard (AS) -
21 on Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India (ICAI)
and are prepared as set out below :

G The financial statements of the Parent Company and its subsidiaries have been combined on a line by line basis
by adding together book values of like items of assets, liabilities, income and expenses, after adjustments/elimination
of inter-company balances and transactions including unrealised profits on inventories etc.

G The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions
and other events in similar circumstances in all material respect and are presented to the extent possible, in
the same manner as the Parent Company's separate financial statements.

G The excess of cost to the Parent Company of its investment in the subsidiaries over the Parent's portion of equity
of the subsidiaries at the dates they became subsidiaries is recognised in the financial statements as goodwill.

G Minority interest in the consolidated financial statements is identified and recognised after taking into consideration:
- The amount of equity attributable to minorities at the date on which investments in a subsidiary is made.
- The minorities' share of movement in equity since the date parent - subsidiary relationship came into existence.
- Adjustment of the losses attributable to the minorities against the minority interest in the equity of the
subsidiaries and thereafter adjustment of the excess of loss, if any, over the minority interest in the equity
against the majority interest.
74

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

1. Significant Accounting Policies (contd.)

✧ The results of operations of subsidiary with which parent-subsidiary relationship ceases to exist are included
in the consolidated financial statements until the date of cesation of the relationship.

✧ The translation of the functional currencies into Indian Rupees (reporting currency) is performed for equity in
the foreign subsidiaries, assets and liabilities using the closing exchange rates at the balance sheet date, for
revenues, costs and expenses using average exchange rates prevailing during the year. The resultant exchange
difference arising out of such transactions is recognised as part of equity (Foreign Currency Translation
Adjustment Account) by the Parent Company until the disposal of investment.

ii) Investment in Joint Venture are accounted in accordance with AS-27 on Financial Reporting of Interest in Joint
Ventures , issued by ICAI, using proportionate consolidation principles based on the financial statements of the entity.

iii) Investment in Associates are accounted in accordance with AS - 23 on Accounting for Investments in Associates
in Consolidated Financial Statements, issued by ICAI under equity method.

2. a) The Consolidated Financial Statements comprise the financial statements of the Parent Company and its subsidiary and
joint venture companies as detailed below :
Proportion of Ownership Interest
Name of the Company Country of Incorporation As at 31st As at 31st
March, 2006 March, 2005
(i) Subsidiary
Domestic :
UM Cables Limited India 100% 100%
Usha Martin Holdings Limited * India * 100%

Overseas :
Usha Martin International Limited United Kingdom 100% 100%
Usha Martin Americas Inc. United States of America 100% 100%
Usha Martin UK Limited United Kingdom 100% 100%
Usha Martin Scandinavia A/S * * Denmark - 100%
European Management and Marine Corporation Limited United Kingdom 100% 100%
EMM Caspian Limited United Kingdom 100% 100%
E.M.M Kazakhstan Limited United Kingdom 100% 100%
Brunton Wolf Wire Ropes FZCO. Dubai 60% 60%
Brunton Shaw Americas Inc. United States of America 100% -
Usha Siam Steel Industries Public Company Limited Thailand 97.85% 100%
Brunton Shaw UK Limited United Kingdom 100% 100%
Usha Martin Singapore Pte. Limited Singapore 100% 100%
Usha Martin Australia Pty Limited Australia 100% -

(ii) Joint Venture Company

Gustav Wolf Speciality Cords Limited India 49% 49%
* Amalgamated with the Parent Company as indicated in Note 6 below.
** Ceased to be a subsidiary during the year.
b) The accounts of UMICOR Africa (Pty) Limited (UMICOR), a wholly owned subsidiary has been excluded for consolidation
since the Board of Directors of the Parent Company has decided to initiate liquidation proceeding for winding up of
UMICOR and according to the management the control is intended to be temporary.
Consequent upon exclusion of UMICOR accounts as aforesaid, the Group's interest representing the excess of net assets
over liabilities in the subsidiary amounting to Rs. 11,904 has been adjusted in these accounts (Schedule 15).
 CONSOLIDATED ACCOUNTS 75

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

3. (a) During the year, the Group has disposed of its investment (Schedule 5) in following domestic associate company, which
was accounted for under equity method and the resulting loss on such disposal amounting to Rs.9,662 has been recognised
in these accounts (Schedule 15).

Associate Country of Incorporation Proportion of ownership interest

As at 31st As at 31st
March, 2006 March, 2005
Usha Martin Ventures Limited India - 42.54%

(b) The Group's interest in the joint venture company accounted for using proportionate consolidation principles based on
its financial statements are :
As at 31st As at 31st
March, 2006 March, 2005
ASSETS
Fixed Assets ( Net Block ) 2,254 3,380
Current Assets, Loans and Advances
Sundry Debtors 16,906 14,033
Cash and Bank Balances 166 163
Other Current Assets 1,225 1,225
Loans and Advances 14 -
Deferred Revenue Expenditure 7 14

LIABILITIES
Shareholders' Funds - Reserves and Surplus (738) (1,058)
Loan Fund
Unsecured Loan 7,982 6,125
Current Liabilities and Provisions
Liabilities 6,327 6,595
Provisions (349) (197)

For the Year For the Year

ended 31st ended 31st
March, 2006 March, 2005
INCOME
Other Income 3,884 2,786

EXPENSES
Manufacturing, Selling and Administrative Expenses 2,399 1,921
Depreciation 1,127 1,127
Interest (1) 3
Deferred Revenue Expenditure Written Off 7 7

RESULTS
Profit/ (Loss) before Taxation 352 (272)
Current Tax 30 -
Fringe Benefit Tax 2 -
Profit/ (Loss) after Taxation 320 (272)
Profit/(Loss) brought forward from Previous Year (1,058) (786)
Balance carried to Balance Sheet (738) (1,058)
76

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

4. There are Contingent Liabilities in respect of :

a) Bank Guarantees outstanding Rs. 248,386 (Previous Year Rs.296,427)

b) Demand for Sales Tax amounting to Rs. 25051 (Previous Year Rs.4,712) for earlier years not acknowledged as debts
and in respect of which appeal has been preferred before appropriate authorities.

c) Demand for Excise Duty Rs. 18,559 (Previous Year Rs.16,527) not acknowledged as debts and in respect of which
appeal has been preferred before appropriate authorities.

d) Demand for Customs Duty Rs. 7,317 (Previous year - Rs.7,514 ) not acknowledged as debts and in respect of which
the Company has preferred appeal before the appropriate authorities.

e) Demand for interest Rs. 11,434 (Previous Year Rs11,434) for non-payment of Excise Duty on electricity raised by Bihar
State Electricity Board not admitted and which is subjudice.

f) Guarantees given by the Parent Company in connection with house building loans granted to the employees by the
Housing Development Finance Corporation Limited amounting to Rs. 72 (Previous Year Rs.106).

g) Corporate Guarantees given by the Parent Company and certain subsidiaries to secure the financial assistance /
accommodation extended to other bodies corporate amounting to Rs.Nil (Previous Year Rs.369,442).

h) Other Claims not acknowledged as debts Rs. 40,765 (Previous Year Rs.39,824).

i) Bills discounted with bank Rs. 172,098 (Previous Year Rs. 414,428)

j) Alleged Customers' claim (extent not ascertainable) relating to quality/non-performance arising from a supply contact
of Rs. 16,026, which has been disputed by the Group.

5. Outstanding Capital Commitments are estimated at Rs. 654,317 (net of advance) (Previous Year Rs.286,239)

6. a) Pursuant to the Scheme of Amalgamation (the Scheme) sanctioned by the Hon'ble High Court at Calcutta on 12th April,
2006 under the provisions of the Companies Act, 1956, the undertaking of Usha Martin Holdings Limited, the transferor
company, engaged in the business of an investment company, stand transferred to and vested in the Parent Company
with effect from 1st April, 2005. Accordingly, the Scheme has been given effect to in these accounts in terms of the
aforesaid High Court order. The transferor company was a wholly owned subsidiary of the Parent Company.

b) In terms of the sanctioned Scheme, all assets and liabilities of the transferor company have been incorporated in the
books of the Parent Company at their respective fair values determined by an independent valuer appointed by the
transferee company and the resultant difference of Rs.317,495 being the excess of liabilities over assets so incorporated
has been debited to the General Reserve (Schedule 2). Upon the Scheme becoming effective, all the Equity Shares held
by the Parent Company in the Share Capital of the transferee company and loans/ advances between the transferee
company and the transferor company stands cancelled.

7. Pursuant to a Business Transfer Agreement (BTA) dated 16th March, 2005 together with other subsequent agreements, the
Group had taken over the management and operational control of JCT Limited's Wire and Wire Rope Unit with effect from
1st June, 2005 under an operating lease agreement. Thereafter, the Group acquired the business of the aforesaid Wire &
Wire Rope Unit of JCT Limited together with its Fixed Assets, specified Current Assets, specified Current Liabilities, etc. with
effect from 1st January, 2006 for a total consideration of Rs.115,891comprising Rs.53,000 for Fixed Assets and Rs.62,891
for specified Net Current Assets. Such consideration has been allocated/apportioned to individual items based on management
evaluation.
 CONSOLIDATED ACCOUNTS 77

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

8. On 10th October, 2005, the Parent Company had allotted on a preferential basis, to certain companies in the promoter
group, 5,800,000 convertible Equity Warrants against receipt of 10% of the consideration of Rs.153 per warrant determined
in keeping with the related SEBI Guidelines. Each Warrant is convertible into one Equity Share of nominal value of Rs. 5
each at a price of Rs.153 per share in lots at the option of the warrant holders within eighteen months from the date of
allotment in accordance with relevant SEBI Guidelines and the terms of the issue upon payment of balance consideration
by the warrant holders. The shares to be allotted would rank pari passu in all respect with the then existing Equity Shares.
In case, the conversion option is not exercised before the expiry of the period allowed for such conversion, 10% of the
consideration received as aforesaid shall be forfeited.

9. Interest is made up as follows :

2005-2006 2004-2005
Interest Expenses 945,033 884,609
Less : Interest Recovered 35,148 25,060
909,885 859,549

10. Deferred Revenue Expenditure comprises :

As at As at
31st March, 2006 31st March, 2005
a) Compensation under Voluntary Retirement Scheme 41,988 59,838
b) Others 8 388
41,996 60,226

11. Computation of Earning per Equity Share (Basic and Diluted )

I. Basic
(a) (i) Number of Equity Shares at the beginning of the year 37,024,593 37,024,593
(ii) Number of Equity Shares issued during the year 7,223,763 -
(iii) Number of Equity Shares at the end of the year 44,248,356 37,024,593
(iv) Weighted average number of Equity Shares outstanding
during the year 40,112,010 37,024,593
(v) Face Value of each Equity Share - Rs. 5 5
(b) Profit after tax attributable to Equity Shareholders of the Parent Company
Profit after Taxation and Minority Interest 843,416 500,821
Basic Earning Per Share [ i(b) /i(a)(iv) ] - Rs. 21.03 13.53

II. Diluted
(a) (i) Number of Potential Equity Shares at the beginning of the year - -
(ii) Number of Potential Equity Shares issued during the year
(Refer Note 8 on Schedule 16) 5,800,000 -
(iii) Number of Potential Equity Shares at the end of the year 5,800,000 -
(iv) Dilutive Potential Equity Shares at the end of the year determined
after taking into consideration the fair value and the issue price
per share 700,293 -
(v) Weighted Average number of Dilutive Potential Equity
Shares outstanding during the year 331,920 -
(vi) Weighted Average number of Equity Shares considered
in computation of Diluted Earnings per Share
[ I (a)(iv)+II(a)(v) ] 40,443,930 37,024,593
(b) Diluted Earning Per Share [ I (b) / II(a)(vi) ] - Rs. 20.85 13.53
78

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

12. Segment Information for the year ended 31st March, 2006

A. Primary Segment Reporting (by Business Segments)

I. Composition of Business Segments

Segments have been identified in accordance with the Accounting Standard on Segment Reporting (AS-17) issued
by ICAI Details of products included in each of the above Segments are given below :
Steel : Steel Wire Rods, Pig Iron, Billets
Wire and Wire Ropes : Steel Wires, Strands, Cord, Bright Bars and Wire ropes
Others : Jelly Filled Telecommunication Cables, Wire Drawing and Allied Machineries, Splicing
Tools, Crimping Tools, accessories etc.

II. Inter Segment Transfer Pricing

Inter Segment prices are normally negotiated amongst the segments with reference to the costs, market prices and
business risks, within an overall optimisation objective for the Group.

III. Segment Revenues, Results and Other Information

Steel Wire and Others Total of

Wire Ropes Reportable
Segment
External Sales * 5,447,646 10,611,794 1,960,169 18,019,609
5,849,107 8,222,744 1,430,713 15,502,564
Inter Segment Sales * 3,566,640 64,749 36,251 3,667,640
3,217,789 61,386 81,911 3,361,086
Other Income 7,438 72,532 27,641 107,611
1,830 20,418 4,173 26,421
Segment Revenues 9,021,724 10,749,075 2,024,061 21,794,860
9,068,726 8,304,548 1,516,797 18,890,071
Segment Result 1,484,435 1,008,534 94,964 2,587,933
1,283,310 660,742 93,119 2,037,171
Segment Assets 10,486,359 8,663,085 1,536,068 20,685,512
10,546,194 8,175,166 1,686,069 20,407,429
Segment Liabilities 2,743,173 3,039,322 894,085 6,676,580
3,504,396 2,755,404 1,041,407 7,301,207
Capital Expenditure (Net) 1,107,491 491,621 17,144 1,616,256
678,357 271,482 6,887 956,726
Depreciation 451,596 418,832 66,364 936,792
411,094 383,721 55,998 850,813
Impairment Loss - 11,959 - 11,959
- - - -
Non cash expenses other
than depreciation 2,981 50,917 3,767 57,665
2,465 14,392 2,627 19,484
* Net of excise duty.
 CONSOLIDATED ACCOUNTS 79

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

IV Reconciliation of Reportable Segments with the Financial Statements

Revenues Results/ Assets Liabilities @
Net Profit
Total of Reportable Segments 21,794,860 2,587,933 20,685,512 6,676,580
18,890,071 2,037,171 20,407,429 7,301,207
Corporate - Unallocated (Net) (274) (413,290) 881,545 8,681,317
(575) (468,226) 920,721 9,737,448
Inter Segment Sales (3,667,640) - - -
(3,361,086) - - -
Interest (Net) - (909,885) - -
- (859,549) - -
Provision for Taxation
- current - (133, 543) - -
- (80,828) - -
- fringe benefit - (12,602) - -
- deferred - (264,425) - -
- (122,278) - -
As per Financial Statements 18,126,946 854,188 21,567,057 15,357,897
15,528,410 506,290 21,328,150 17,038,655
@@
@ Excluding Shareholders' Funds and Minority Interest
@@ Profit After Taxation and before Minority Interest.

B. Secondary Segment Reporting (by Geographical Segments)

Within India Outside India Total
Revenues - External 10,893,884 7,233,336 18,127,220
8,351,761 7,177,224 15,528,985
Total Assets 16,062,893 4,622,619 20,685,512
16,087,015 4,320,414 20,407,429
Capital Expenditure (Net) 1,367,379 248,877 1,616,256
825,153 131,573 956,726
Figures in normal type relates to previous year.

13. Related Party Disclosures - pursuant to AS 18 issued by ICAI

(i) Related Parties

Name Relationship
(a) Where control exists :
UMICOR Africa (Pty) Limited ( Refer Note 2(b) above ) Subsidiary
(b) Others :
Usha Martin Ventures Limited Substantial Interest in
(ceased to be an Associate during the year) voting power of the entity
Mr. Rajeev Jhawar, Managing Director Key Management Personnel
Dr. P Bhattacharya, Joint Managing Director Do -
80

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

( ii ) Particulars of Transactions during the year ended 31st March, 2006

Particulars Subsidiary Substantial interest Key Management

Company in voting power of Personnel
the entity
(a) Dividend Paid - 2,652 55
- 1,326 28
(b) Interest Paid / (Recovered) (Net) - (310) -
- (340) -
(c) Directors' Remuneration - - 42,060
- - 26,065
(d) Directors' Commission Paid - - 14,685
- - 7,344
(e) Reimbursement/(Recoveries) of Expenses (Net) - 1,200 -
- 1,680 -
(f) Advances Given - - -
- (1,010) -
(g) Advances written off 30,139 - -
- - -
(h) Balance outstanding at the year-end
Sundry Creditors 174 - 30,578
- - 14,685
Loans and Advances - 188 -
- 6,620 -
Other Current Assets - 17,205 -
- 18,338 -

Figures in normal font relate to previous year.

14. Depreciation for the year and year-end Accumulated Depreciation includes approximately Rs. 134,611 ( Previous Year
Rs.127,766) and Rs.1,002,178 ( Previous Year Rs. 890,115) respectively computed by certain subsidiaries applying different
depreciation method/rates as set out in Note 1(b)(vii) above.

15. Year-end Deferred Tax balance comprises the following :

As at As at
31st March, 2006 31st March, 2005
Rs. Rs.
Timing Difference resulting in liabilities / (assets) on account of :
Depreciation as per tax law and books 1,581,747 1,635,368
Unabsorbed tax depreciation / loss * (162,822) (489,701)
Disallowances allowable for tax purpose on payment (13,420) (4,705)
Provision for doubtful debts (42,854) (43,568)
Deferred Revenue Expenditure 6,344 8,292
Others ** (1,827) -
Deferred Tax Liability (Net) 1,367,168 1,105,686
* Absorption expected based on future Taxable Income.
** After considering the tax effect of Rs.2,304 relating to Share /
GDR Issue Expenses
Note : Deferred Tax charge for the year includes of Rs. 636 (Previous year net of Rs.410) on account of exchange fluctuations
due to re-instatement of year end deferred tax assets and liabilities.
 CONSOLIDATED ACCOUNTS 81

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

16. Operating Lease Commitments

a) The Group has entered into various non-cancellable operating lease agreement in connection with certain Property and
Plant and Equipment in earlier years. The Future minimum lease commitments of the Group are as follows :

As at 31st March, 2006 As at 31st March, 2005

Operation and Operation and
Lease rent Maintenance Lease rent Maintenance
Charges Charges
Rs. Rs. Rs. Rs.
Within 1 Year 27,534 13,527 44,777 13,527
More than 1 Year and up to 5 Years 113,122 53,326 158,150 53,326
More than 5 Years. 132,690 70,799 218,017 84,326

In the current financial year the Group has charged the following items in the Profit and Loss account of the aforesaid
operating lease.
2005-06 2004-05
Rs. Rs.
Lease Rent 55,241 50,274
Operation and Maintenance Charges 13,527 13,527
Escalation Charges 9,234 6,033
Total 78,002 69,834

(b) The Group has entered into cancellable operating lease transactions for office spaces, employees' residential
accommodations etc. Tenure of leases generally vary between 1 and 3 years. Terms of the lease include operating
term for renewal, increase in rent in future periods and term of cancellation. Related lease rentals aggregating
Rs. 7,077 (Previous year Rs.8,783 ) have been debited to Profit and Loss Account for the year.

17. The future obligation under finance lease and hire purchase agreements amounts to Rs. 14,628 (Previous Year Rs 27,380)

18. Other Current Assets - Others represent land valued at Rs.3,559 [Thai Baht 3,100 thousand ] (Previous Year Rs.3,466 (Thai
Baht 3,100 thousand)] which is not used in operations. During the year 2003-04, the carrying amount of such Land had
been written down by Rs.3,089 (Thai Baht 2,736 thousand ) based on an appraisal carried out by an independent valuer.

19. a) Land of a subsidiary company was appraised in 1999 and was reappraised in 2004 by an independent appraiser on
the basis of fair value. The resultant increase (at the current exchange rate ) of Rs.128,647 thousand [Thai Baht 112,150
thousand ] was added to the carrying amount of the Land and the corresponding amount was recognised as Fixed Assets
Revaluation Reserve.

b) Buildings and Plant and Machinery of three subsidiary companies have been appraised during the year by independent
appraisers on an open market basis/the basis of fair values. The resultant increases (at the current exchange rates) as
set out below have been added to the carrying amount of respective assets and credited to Fixed Assets Revaluation
Reserve.

Assets Amounts added on Revaluation

Indian Rupees Thai Baht Indian Rupees Great Britain Pound Total Indian Rupees
(Thousand) (Thousand) (Thousand) (Thousand) (Thousand)
Building 16,200 14,779 27,022 343 43,222
Plant and Machinery 162,190 147,962 52,013 660 214,203
Total 178,390 162,741 79,035 1,003 257,425

(c) Depreciation charge of Rs.5,213 (Previous Year Rs. Nil) for the year, which is attributable to amount added on revaluation
as indicated in paragraph (b) above, has been adjusted by way of transfer from Revaluation Reserve.
82

CONSOLIDATED FINANCIAL STATEMENTS OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES

SCHEDULES TO ACCOUNTS (Contd.) (Rupees in Thousand)

16. NOTES ON ACCOUNTS (contd.)

20. During the year, impairment loss of Rs.12,524 thousand (Thai Baht 10,910 thousand) comprising Rs.853 thousand (Thai
Baht 743 thousand) on account of certain Buildings and Rs.11,671 thousand (Thai Baht 10,167 thousand) on account of
certain Plant and Machinery (Schedule 4) in respect of a subsidiary engaged in the business of Wire and Wire Ropes, a
reportable segment of the Group has been ascertained and recognised in these accounts after netting of Rs.565 thousand
on account of foreign exchange adjustment.

21. Provision for Dividend Tax includes Rs. Nil (Previous Year Rs.71) paid in respect of earlier year.

22. Pursuant to issuance of additional shares during the year by a subsidiary to a third party, the ownership interest of the Group
therein has been reduced from 100% to 97.85% resulting in recognisation of Minority Interest in keeping with the accounting
policy set out in Note 1(r) above.

23. Year end carrying amount of investment in Preference Shares in a company (Schedule 5) has been arrived at after considering
adjustments arising on valuation by an independent valuer pursuant to the Scheme of Amalgamation as indicated in
Note 6 (b) above and on account of disposal of part of the holding during the year.

24. The effect of disposal of Group's investment in a non-significant subsidiary company on the year end financial position,
the results for the year and together with the corresponding amounts for the preceeding year are set out below.

As on the date As at 31st

of disposal March, 2005
Carrying amount of Net Assets 56,053 52,692
Add : Profit on disposal of Subsidiary 20,932 -
Sale Proceeds 76,985 -

Up to the date For the year

of disposal 2004-05

Profit after Taxation 3,361 6,625

25. Figures for the previous year have been regrouped/ rearranged wherever necessary. However, in view of exclusion of a
subsidiary for consolidation, acquisition of business and disposal of a subsidiary referred to in respective Notes 2(b), 7 and
24 above, Current year figures are not comparable with the Previous year.

Signatures to Schedule 1 to 16.

P. Jhawar Vice Chairman

R. Jhawar Managing Director

Dr. P. Bhattacharya Jt. Managing Director

A. K. Somani Company Secretary

 CONSOLIDATED ACCOUNTS 83

CONSOLIDATED CASH FLOW STATEMENT OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES
For the year ended 31st March, 2006 (Rupees in Thousand)

For the For the

year ended year ended
31st March, 31st March,
2006 2005
Rs. Rs. Rs. Rs.
A. Cash flow from Operating Activities :

Net Profit Before Taxation, Share of Earnings from

Associates and Minority Interest 1,264,758 706,841

Adjustments for :
Depreciation and Amortisation 959,572 872,987
Interest (Net) 909,885 859,549
Finance Charges relating to Prepayment of Loans and Other Items 27,221 97,098
Gain on Debt Restructuring - (46,672)
Profit on Sale of Long Term Investments - (14)
Profit on redemption of Investments - (2)
Profit on Sale of Fixed Assets (Net) (31,818) (6,166)
Profit on disposal of a Subsidiary (20,932) -
Adjustments arising on exclusion of a Subsidiary Company 11,904 -
Loss on disposal of Investment in an Associate Company 9,662 -
Provision for Doubtful Debts, Advances and Investments 6,550 28,316
Provision for slow moving items and diminution in realisable value 15,171 -
Bad Debts written off / Provision written back (Net) 1,863 22,389
Deferred Revenue expenditure written off 24,800 29,623
Impairment Loss 11,959 -
Exchange (Gain)/Loss (Net) 6,717 48,305
Effect of change in Foreign Exchange Translation 27,192 1,959,746 (58,465) 1,846,948
Operating profit before working capital changes 3,224,504 2,553,789
Increase / Decrease in :
Trade and Other Receivables (127,543) (533,865)
Inventories 294,154 (1,083,666)
Trade Payables 17,946 184,557 1,948,382 330,851
Cash generated from operations 3,409,061 2,884,640
Direct Taxes paid (167,520) (46,278)
Payment against Voluntary Retirement Scheme (6,582) (174,102) (1,655) (47,933)
Net cash from Operating Activities 3,234,959 2,836,707

B. Cash flow from Investing Activities :

Purchase of Fixed Assets (1,562,903) (924,156)
Sale of Fixed Assets 40,838 45,678
Disposal of Subsidiary (Refer Note 24 on Schedule 16) 76,985 -
Disposal of Investment in an Associate Company 128,544 -
Sale /Redemption of Investments 345 89
Consideration for acquisition of JCT Limited's Wire and Wire Rope Unit (115,891) -
(Refer Note 7 on Schedule 16)
Purchase of Investments - (753)
Investments for acquisition of control in Subsidiaries - (2,086)
Intercorporate Loans (Net) (7,397) (655)
Interest Received 34,911 56,888
Dividend Received 480 480
Net Cash used in Investing Activities (1,404,088) (824,515)
Carried forward 1,830,871 2,012,192
84

CONSOLIDATED CASH FLOW STATEMENT OF USHA MARTIN LIMITED AND ITS SUBSIDIARIES
For the year ended 31st March, 2006 (Rupees in Thousand)

For the For the

year ended year ended
31st March, 31st March,
2006 2005
Rs. Rs. Rs. Rs.

Brought forward 1,830,871 2,012,192

C. Cash flow from Financing Activities :
Proceeds from issuance of Equity Shares (Note on Schedule 1) 1,093,527 -
[ Net of Share /GDR Issue Expenses Rs. 33,348 ; (Previous Year Rs. Nil) ]
Proceeds from issue of Shares in Subsidiary Companies to Minority Shareholders 23,927 72,181
Advance Received on issue of Equity Warrants 88,740 -
Capital Subsidy Received 30,000 -
Proceeds from Borrowings (Net of Finance Charges relating to
Prepayment of Loans and Other Items) - Receipts / (Payment) (Net) (1,842,448) (1,079,968)
Interest Paid (973,573) (865,960)
Dividend Paid (including tax thereon Rs. 77,89 ;Previous Year Rs.3,629) (63,511) (31,788)
Dividend Paid by a Subsidiary Company to Minority Shareholders (6,410) -

Net Cash used in Financing Activities (1,649,748) (1,905,535)

181,123 106,657
D. Exchange differences on Translation of Foreign Currency 3,270 (1,935)
Cash and Cash Equivalents 184,393 104,722

Cash and Cash Equivalents as at 31st March, 2005 (Schedule 8) 492,824 388,102
Less : Elimination on account of Exclusion and Disposal of
Subsidiaries (Refer Notes 2(b) and 24 on Schedule 16) 649 -
492,175 388,102
Cash and Cash Equivalents as at 31st March, 2006 (Schedule 8) 676,568 184,393 492,824 104,722

Notes :
1. The above Consolidated Cash Flow Statement has been prepared under the Indirect Method as set out in the Accounting Standard - 3 on Cash Flow
Statements issued by the Institute of Chartered Accountants of India.
2. Schedules referred to above form an integral part of the Consolidated Cash Flow Statement.
3. Refer Note 25 on Schedule 16 to Accounts.

This is the Consolidated Cash Flow Statement referred to in our report of even date.

(P. Law)
Partner
P. Jhawar Vice Chairman
Membership No: F51790
For and on behalf of R. Jhawar Managing Director
PRICE WATERHOUSE
Chartered Accountants Dr. P. Bhattacharya Jt. Managing Director
Kolkata
A. K. Somani Company Secretary
6th May, 2006
 CONSOLIDATED ACCOUNTS 85

Auditor’s report to the board of directors of Usha Martin Limited on the consolidated financial
statements of Usha Martin Limited and its subsidiaries

1. We have audited the attached Consolidated Balance Sheet and joint venture company, is based solely on the report
of Usha Martin Limited and its subsidiaries (The Usha of the other auditors.
Martin Group) as at 31st March, 2006, the consolidated
4. We report that Consolidated Financial Statements have
Profit and Loss Account for the year ended on that date
been prepared by the UML’s Management in accordance
and the Consolidated Cash Flow Statement for the year
with the requirements of Accounting Standard (AS) 21,
ended on that date annexed thereto, all of which we have
‘Consolidated Financial Statements’, AS 23 ‘Accounting
signed under reference to this report. These financial
for Investments in Associates in Consolidated Financial
statements are the responsibility of the Usha Martin Limited’s
Statements’ and AS 27, ‘Financial Reporting of Interests
management (UML’s Management) and have been
in Joint Ventures’, issued by the Institute of Chartered
prepared by the management on the basis of separate
Accountants of India.
financial statements and other financial information
regarding components. Our responsibility is to express 5. Based on our audit and on consideration of reports of
and opinion on these financial statements based on our other auditors referred to in paragraph 3 above on separate
audit. financial statements and other financial information and
to the best of our information and according to the
2. We have conducted our audit in accordance with auditing
explanations given to us, we are of the opinion that the
standards generally accepted in India. Those Standards
attached Consolidated Financial Statements give, a true
require that we plan and perform the audit to obtain
and fair view in conformity with the accounting principles
reasonable assurance about whether the financial
generally accepted in India :
statements are prepared, in all material respects, in
accordance with an identified financial reporting framework a) in the case of the Consolidated Balance Sheet, of the
and are free of material misstatement. An audit includes state of affairs of the Usha Martin Group as at
examining, on a test basis, evidence supporting the amounts 31st March, 2006
and disclosures in the financial statements. An audit also
b) in the case of the Consolidated Profit and Loss Account,
includes assessing the accounting principles used and
of the profit for the year ended on that date; and
significant estimates made by management, as well as,
evaluating the overall financial statement presentation. c) in the case of the Consolidated Cash Flow Statement,
We believe that our audit provides a reasonable basis for of the cash flows for the year ended on that date.
our opinion.
3. We did not audit the financial statements of certain
subsidiaries and a joint venture company, whose financial
statements reflect total assets of Rs. 5,003,081 thousand
as at 31st March, 2006 and total revenues of Rs. 6,602,301
thousand and cash flows of Rs. 10,126 thousand for the (P Law)
Partner
year ended on that date. These financial statements have
Membership No. F 51790
been audited by other auditors whose reports have been
For and on behalf of
furnished to us, and our opinion, in so far as it relates to
Kolkata Price Waterhouse
the amounts included in respect of the aforesaid subsidiaries
6th May, 2006 Chartered Accountants
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