Usha Martin to invest Rs 462 crore

Usha Martin, a leading producers of speciality steel and one of the largest wire rope manufacturer, has lined up a capital expenditure of Rs 462 crore for steel capacity expansion to half a million tonne from the current level of 340,000 tonne.

Rajiv Jhawar, managing director of Usha Martin, said the capital expenditure would also include enhancement of power generation capacity, coal mining and expansion of Indian and global wire and wire rope business.

The investment would be spread over three years.

The company was looking at greenfield options in the US market, which was one of the largest wire rope consumers.

The company exported around 10,000 tonne to the US last fiscal.

Jhawar said the company could locate the plant in Houston but a final decision would be taken over the next three months.

The plant would be set up in 12-18 months.

Usha Martin has appointed ICICI Securities for working out funding options for its capacity expansion programme.

ICICI would submit its report in the next three months.

Jhawar said the capital expenditure would be funded by internal accruals and debt and possibly equity.

During the quarter, the company took over the management and operational control of JCT's steel division.

The JCT division had facilities for manufacturing steel wire and wire rope products in Hoshiarpur, Punjab.

With this acquisition, Usha Martin had added capacity for value added products increased by 30,000 tonne and a manufacturing facility in north India.The company would put in around Rs 50 crore in its units and other subsidiaries.

Usha Martin had manufacturing facilities in Ranchi and Jamshedpur in India, and UK, Thailand and UAE.

The steel capacity expansion would be at the Jamshedpur plant.

The company has created a worldwide distrbution service and marketing network spread across the US, UK, Europe, Africa and Asia.

Jhawar said after the capacity expansion, the company would have an installed capacity of 220,000 tonne.

Jhawar said the outlook of the industry was positive despite the cycles in the steel business. He said even though prices were headed downwards, raw material prices were also moving down and hence it would not affect margins.

The company had been allocated mining blocks of coal and iron ore in Jharkhand, which would further insulate the company from major input cost fluctuations.