The Hindu Business Line : Usha Martin turns to captive sources for ‘cost competitiveness’

Sourcing of 100 per cent of its iron ore and coal requirements from captive sources will translate into “cost competitiveness” to the tune of Rs 120 crore for Usha Martin Ltd. This, in turn, will ensure that the company’s operating margin goes up by “at least five per cent”, according to Mr Rajeev Jhawar, Managing Director of the company.

Speaking to reporters after the conclusion of the 21st annual general meeting of the company held here on Wednesday, Mr Jhawar said 100 per cent of the company’s iron ore consumption was being met from its own mines. This would mean a savings of Rs 60 crore in the current fiscal.

Hundred per cent of its coal requirements from captive sources would become a reality from October-November 2007. Its full impact, however, would be reflected in the fiscal 2008-09. Savings on this account would amount to an additional Rs 60 crore.

Expansion plans

According to him, the company was on course with regard to the expansion project that envisages augmentation of special steels production to one million tonnes per annum. Even after the expanded facility goes on stream, the ratio of value added steel products would remain at the current levels of 50 per cent. At that time, too, the company’s requirement of iron ore and coal would continue to be met from captive sources.

Mr Jhawar said that, over the next eight years, the company would earn Rs 4.2 crore annually from carbon credit. He described the outlook for special steels and value added products as “strong and stable”.

During the year 2006-07, Usha Martin Ltd earned a total income of Rs 1,422.93 crore against Rs 1,241.27 crore in 2005-06. The profit before tax in 2006-07 was Rs 138.39 crore compared with Rs 100.73 crore the previous year. The profit after tax in 2006-07 stood at Rs 101.47 crore compared with Rs 64.96 crore the previous year. A dividend of Rs 3.75 (75 per cent) was declared on each equity share of the face value of Rs 5 each.

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