Usha Beltron Limited

completed

Usha Beltron Limited has two main manufacturing businesses: (i) specialized steel products (wire ropes, wires and wire rods) comprising 70% of the company''s revenue; and (ii) jelly filled telephone cables (JFTC). The specialized steel products manufactured by Usha Beltron are high value added niche products which are often made to customer specifications through labor intensive processes. In order to become more cost competitive, the company has undertaken a series of vertical integration projects and in the next phase, it proposes a project for: (i) adding a 7.5 MW waste heat recovery based captive power plant; (ii) setting up a direct reduced iron (DRI) plant to manufacture sponge iron (the main raw material); and (iii) setting up facilities for manufacturing more value-added products in wires and strands, and bright bars. The DRI and the captive power plants are likely to lead to significant cost savings. The company also plans to restructure some debt (which are term loans in rupees from local banks with repayments falling due over the next 2-3 years) and replace it with long term debt. IFC Role: IFC is considering to provide long term capital to assist structuring this project and in restructuring the Company''s high cost, short term debt as other sources of long term financing are generally not available to the Company in the current market scenario. IFC will ensure that Usha Beltron conforms to high standards of environmental, safety and social consciousness as well as to improved corporate governance.Development Impacts: The key development benefits of this project are: (i) enabling a mid-level company to become more internationally competitive; (ii) efficiency increases resulting from the backward integration – lower cost production from DRI and captive power plants; and (iii) environmental benefits of using hot waste gases, from the DRI plant, for fuel in the power plants.