January, 25th 2013

Ushdev International Ltd (UIL)

Rating: Buy
BSE 511736 NSE NA Bloomberg UTF IN Sensex 52 Wk: Hi/Lo 20036/ 15748 Mkt Cap (INR Bn) 70679.5 Equity (INR Mn) Mon. Avg.Volume Face Value (INR) * - TTM standalone basis ACE equity Share Holding % Foreign Institutions Corporate Promoters Public & Others Returns % 1 Month 3 Months 1 Year
70% 50% 30% 10% -10% -30% Jan-10 335 315 295 275 255 235 215 195 175 Jan-12 Apr-12 Jul-12 Oct-12 10 0 Jan-13 40 30 20 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Price Jan-13 60 50

Target Price: INR 429

Upside: 87%

CMP: INR 230 (as on 25th January 2013)

Reuters USTFBO USHDEV 340/186 7.7 33.8 20720 10.0 June-12 5.98 0.04 5.13 54.69 34.16 Relative to Sensex 1.70 5.50 24.80
SENSEX

De-risked business model UIL follows a de-risked business model which secures it from both ends, i.e. from their suppliers and customers without carrying inventory cost. This helps the company to secure discounts on bulk orders generated from multiple customers and enjoy the spread in transactions executed. Focus on international markets UIL has over the years established strong presence internationally. To leverage this relation and reduce dependency on domestic market, company is tapping the international market by way of venturing into trading of Non-ferrous segment through its overseas subsidiaries based in Singapore and Hong Kong which is helping the company to increase its market share. Diversified product portfolio UIL since inception has gone beyond the core business portfolio of steel to foray into other metal spaces and evolve as a wholesome trading company. This has helped the company to reduce its dependency on single products from ~75% in 2009 to ~55% in 2012 which will result into helping them to maintain EBITDA margins at 4.0-4.5% going forward. Private Equity (PE) investor: a strategic move ahead UIL raised $26mn through Oxley Securities Pte Ltd, Singapore (part of Oxley Group) in FY12. This will benefit Ushdev to secure supply of raw material in international market and also enhance volume through Oxley Group. Enjoying MAT benefit through wind power business UIL since 1997 has set up a total of 30.83MW wind power plants in five states of India. This has helped the company to reduce its effective tax rate and enjoy MAT benefit at consolidated level till FY17. Plans for backward & forward integration UIL is currently focused on B2B segment, going ahead company intends to have backward & forward integration. This will be done by a way of acquiring mines and/or metal manufacturing plants. This strategy will help to secure the supply and pricing of products. Valuation & Outlook At CMP of INR 230, UIL is trading at a P/E of 6.6x and 4.3x to its FY13E and FY14E EPS of INR 35 and INR 53.7. Historically the company has traded at one year forward rolling P/E multiple of 8x and EV/EBITDA multiple of 2.5x. We see the growth outlook to be positive and therefore we value the stock at 8x PE and 2.5x EV/EBITDA on FY14E derived a price target of INR 429, an upside of 87% from the current levels.

Sept-12 18.26 0.06 4.43 47.58 29.67 Abs Perf -0.43 -13.39 -23.78
UIL

Initiating Coverage

Relative Price Performance

Volume (000's)

Analyst Harshad Gujrathi 022-40767327 harshad.gujrathi@kslindia.com Financial Summary

Y/E Mar FY12 FY13E FY14E FY15E Rev (INR mn) 59,469 90,392 126,549 177,169 YoY (%) 79.2 52.0 40.0 40.0 EBITDA (INR mn) 2,155 3,616 5,315 7,795

EBITDA (%) 3.6 4.0 4.2 4.4

PAT (INR mn) 723 1,185 1,817 2,785

YoY (%) 65.4 63.9 53.3 53.2

EPS (INR) 24.6 35.0 53.7 82.3

RoE (%) 18.8 18.9 22.7 26.0

RoCE (%) 36.7 41.2 50.9 57.9

P/E (x) 9.4 6.6 4.3 2.8

EV/EBITDA (x) 3.3 2.0 1.1 0.6

For private circulation only. Please read the Important Disclosure at the end of the report. KSL Intelligent Research Reports can be accessed on: www.bloomberg.net (KHDS<GO>), www.thomsonreuters.com, www.capitaliq.com, www.themarkets.com, www.kslindia.com, www.moneycontrol.com, www.securities.com, www.valuenotes.com This report is intellectual property of Khandwala Securities Ltd; queries on this report may be directed to Head of Research at research@kslindia.com

Ushdev International Limited

Consolidated Financials (Y/E Mar)

P&L (INR Mn) Net Sales Total Exp EBITDA Depreciation EBIT Interest Other Income PBT Tax PAT Balance sheet (INR Mn) Share Capital Total Reserves Net worth Secu. Loans Uns. Loans Total Debt Total Liability Net Assets Sundry Debtors Cash and Bank Other CA Loans and Adva Total CA Trade Payables Other CL Provisions Total CL Net CA Total Assets Cash Flow (INR Mn) Net CFO Cash Flow Invest. Cash Flow Financial Net Cash Key Ratios No. of Share (mn) P/E (x) P/CEPS (x) P/BV (x) Mcap/Sales (x) EV/Sales (x) EV/EBITDA (x) Diluted EPS CEPS Div./share (Rs) BV (Rs.) Cash/share (Rs.) EBIDTA (%) EBIT (%) NPM (%) RoE (%) ROCE (%) Deb. T/o (Days) Crd. T/o (Days) Inv. T/o (Days) D/E Ratio Int. cove. Ratio FY11 33,192 31,980 1,213 76 1,136 852 256 540 103 437 FY11 294 2,802 3,097 747 2,166 2,913 6,046 1,473 10,014 1,976 21 6,654 18,815 12,856 1,382 3 14,241 4,573 6,046 FY11 248 (1,079) 1,082 251 FY11 29.4 18.2 15.5 2.6 0.2 0.3 7.3 14.9 17.5 2.1 105 67.1 3.7 4.2 1.3 14.1 29.3 110 141 2 0.9 1.4 FY12 59,469 57,313 2,155 92 2,063 1,427 229 864 141 723 FY12 294 3,560 5,181 1,369 1,501 2,870 8,062 1,383 17,509 2,509 129 6,429 26,579 18,424 1,465 12 19,901 6,679 8,062 FY12 60 (204) 247 103 FY12 29.4 9.4 8.3 1.8 0.1 0.1 3.3 24.6 27.7 2.1 131 85.2 3.6 3.9 1.2 18.8 36.7 107 113 0 0.6 1.5 FY13E 90,392 86,776 3,616 103 3,513 2,260 229 1,482 297 1,185 FY13E 338 5,945 6,284 985 1,651 2,636 8,930 1,451 22,288 3,359 135 6,750 35,033 26,003 1,538 12 27,554 7,479 8,931 FY13E 3,748 (171) (1,624) 1,953 FY13E 33.8 6.6 6.0 1.2 0.1 0.1 2.0 35.0 38.1 2.1 186 99.2 4.0 4.1 1.3 18.9 41.2 90 105 10 0.4 1.6 FY14E 126,549 121,234 5,315 108 5,207 3,164 229 2,272 455 1,817 FY14E 338 7,680 8,018 528 1,801 2,329 10,358 1,443 31,204 4,279 142 7,088 45,213 34,671 1,615 12 36,298 8,914 10,358 FY14E 4,724 (100) (1,981) 2,643 FY14E 33.8 4.3 4.0 1.0 0.1 0.0 1.1 53.7 56.9 2.1 237 126.4 4.2 4.3 1.4 22.7 50.9 90 100 7 0.3 1.7 FY15E 177,169 169,373 7,795 114 7,682 4,429 229 3,481 697 2,785 FY15E 338 10,381 10,720 204 1,951 2,154 12,885 1,429 43,685 5,499 149 7,442 59,276 46,112 1,696 12 47,821 11,455 12,885 FY15E 6,157 (100) (2,147) 3,910 FY15E 33.8 2.8 2.7 0.7 0.0 0.0 0.6 82.3 85.6 2.1 317 162.5 4.4 4.5 1.6 26.0 57.9 90 95 5 0.2 1.8 0% FY11 FY12 FY13E FY14E FY15E 40% 41% 30% 20% 10% 29% 19% 14% 19% 23% 37% 26%

EBITDA Trends (INR Bn)

EBITDA 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 EBITDA (%) 4.4% 5%

4.2% 4.0% 3.7% 3.6%

5%

4%

4% FY11 FY12 FY13E FY14E FY15E

D/E Ratio (x)

1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 FY11 FY12 FY13E FY14E FY15E 0.6 0.4 0.3 0.2 0.9

RoE & RoCE (%)

70% 60% 50% 51% 58% RoE RoCE

Khandwala Securities Limited

Ushdev International Limited

Q3FY13E Result Preview (INR mn)

Income statement (Mn) Net Sales Total Expenditure EBITDA EBITDA (%) Depreciation EBIT Other Income Interest PBT Tax Profit After Tax PAT (%) Equity Capital EPS
Source: KSL Research, UIL

Q1FY12 11,808.6 11,382.5 454.8 3.9% 23.1 431.8 17.5 289.7 159.6 31.8 127.8 1.1% 294.3 4.3

Q2FY12 11,987.3 11,506.2 481.1 4.0% 23.2 457.9 329.2 128.6 4.2 124.4 1.0% 294.3 4.2

Q3FY12 13,866.9 13,408.1 524.9 3.8% 23.1 501.7 1.7 320.2 183.3 33.9 149.4 1.1% 294.3 5.1

Q4FY12 20,824.4 20,004.9 685.2 3.3% 23.0 662.2 220.9 494.6 388.4 70.3 318.1 1.5% 294.3 10.8

Q1FY13 16,049.7 15,454.5 595.2 3.7% 23.1 572.1 175.2 449.0 298.3 58.9 239.5 1.5% 294.3 8.1

Q2FY13 19,069.5 18,706.2 363.4 1.9% 21.8 341.6 343.1 430.3 254.4 45.7 208.8 1.1% 338.5 6.2

Q3FY13E 21,775.0 21,208.5 566.5 2.6% 22.2 544.3 171.6 451.8 264.0 47.5 216.5 1.0% 338.5 6.4

YoY 57% 58% 8% -118 bps -4% 8% 9992% 41% 44% 40% 45% -8 bps 15% 26%

QoQ 14% 13% 56% 70 bps 2% 59% -50% 5% 4% 4% 4% -10 bps 0% 4%

Q3FY13E Result Preview

After reviewing quarterly numbers of last two years, a trend has been observed that the companys first three quarters contributes 60% and last quarter contributes 40% of full year revenue. We expect companys consolidated revenue to grow at 57% & 14% on YoY and QoQ in Q3FY13E to INR 21,775 mn, due to higher volume from both ferrous and non ferrous segments in addition to higher contribution from the Hong Kong subsidiary. The expected EBITDA is INR 566.5 mn during Q3FY13E due to higher contribution from non ferrous segment. This will lead EBITDA margin to 2.6% from 1.9% QoQ and 3.8% in YoY. We expect higher revenue growth; EBITDA will help the company to achieve PAT of INR 216 mn during the quarter which leads to an increase of 45% on YoY and 4% on QoQ basis.

Quarterly consolidated sales trend (INR Mn)

25,000

Quarterly PAT trend (INR Mn)

350 300 2.1% PAT PAT (%) 1.5%

2% 2% 2%

20,000

250 200 150 100

1.7%

1.5% 1.1% 1.1% 1.1%1.0%1.1% 0.9%

2% 1.0% 2% 1% 1% 1% 1% 1%

15,000

10,000

5,000

50 0 Q1FY11 Q3FY11 Q1FY12 Q3FY12 Q1FY13 Q3FY13E Q1FY11 Q4FY11 Q3FY12 Q2FY13

0 Source: KSL Research, UIL

Source: KSL Research, UIL

Khandwala Securities Limited

Ushdev International Limited

Investment Rationale
De-risked business model The company has a very unique model of metal trading, wherein Company does not take any position or speculates on metal prices and their module works on a complete back-to-back business wherein the risk of fluctuation in prices upward or downward is mitigated. UIL does not directly get involved in the logistics of materials as the same is being dispatched directly from the seller to buyer. The companys business model is based on B2B design. The company places an order on its supplier only after the receipt of purchase order from its customers and this gives an added advantage of zero inventory carrying cost. In turn the supplier, supplies the material directly to the customer thereby reducing the logistics costs and mitigating the logistics risks involved in the supply of material. It enables the company to bring the company to enjoy higher margins compared to its peer group in the industry. Business Model:

Benefits

Source: KSL Research, UIL

Focus on international markets UIL has established strong linkages not only in domestic markets but also in international markets over decades. It routes 45% of its products from/to more than 28 different international destinations. To leverage this relation and reduce dependency on domestic markets, company is tapping international markets by venturing into trading of Non-ferrous segment (i.e. high value transactions) through its overseas subsidiaries based in Singapore and Hong Kong; UIL Singapore Pte Ltd caters to Indonesia, Australia, USA & UK UIL Hong Kong Ltd caters to China, Vietnam, Thailand and Middle East UILs international subsidiaries contributed approximately 32% to its top line in FY12 and are expected to increase its contribution in near future. This strategy will help company to increase its market share in internationally as well. Non-ferrous segment is expected to increase its contribution to ~40-45% in total sales value in FY13E from approximately 20% in FY12 . Performance of Subsidiary in FY12: Company (INR mn) UIL Singapore PTE Ltd UIL Hong Kong Ltd
Source: KSL Research, UIL

% holding 100% 100%

Sales 7624 9855

PAT 52.5 51.2

PAT (%) 0.7% 0.5%

Khandwala Securities Limited

Ushdev International Limited

Diversified product portfolio As a progressive company that constantly believes in expanding its product portfolio, UIL also has the distinction of going beyond the core business portfolio of steel to foray into other metal space and evolve as a wholesome trading company. This has helped the company to reduce its dependency on single products from ~75% in 2009 to ~55% in 2012. This diversification strategy was implemented after the global financial crises which had affected the metal sector worldwide. This resulted in grabbing of high value international trades especially in the Non Ferrous segment. Currently it is present in the entire metals value chain by further diversifying its product basket by trading in raw materials such as metallurgical coal, coke, sponge iron, pig iron, steel scrap and liquid metal. Further the company is also exploring the possibility of trading in scarce products like silica, tin, etc., which will add better margins to the company and also increase customer base at global level, compared to other commodity products. The shift in product portfolio that fetches higher trading margins has helped UIL to maintain its EBIDTA margins, even though there is a drop in margins of ferrous flat products. Seeing the inherent nature of metal trading business the margins are always expected to remain low in the range of ~3.5% to 4.0%, but as compared to peers it also boasts one of the highest margins in trading business. Companys Product Portfolio:

Source: KSL Research, UIL

Khandwala Securities Limited

Ushdev International Limited

Private Equity (PE) investor a strategic move ahead UIL has raised USD 26 mn in FY12 through Oxley Securities Pte Ltd; Oxley Group is an innovative Singapore based company specializing in mining, private equity, real estate, renewable energy businesses across Asia Pacific. Oxley is led by Mr. Michael Dwyer, who has over 15 years of experience in the REIT and multiple areas. Oxley Securities Pte Ltd A Private equity investments arm of Oxley Capital group, who manages a diversified portfolio of investments across Asia Pacific with AUM of USD 1,000 mn. Oxley Securities Pte Ltd, Singapore has invested 44,23,600 equity shares of Ushdev International Limited, India @ INR 300 per share aggregating to USD 26 mn. The objective of this investment is to leverage both companies businesses from the mining and trading segment. Since Oxley Group has acquired Coal, Nickel, Gold mines in Indonesia, Magnolia, Malaysia, and Australia and Ushdev International Limited has been already in trading business of Metal Value chain, we expect this transaction will help both companies to get benefits in the long run. Enjoying MAT benefit through wind power business Ushdev since 1997 has set up a total of 30.83MW wind power plants in five states of India. This has helped the company to reduce its effective tax rate and enjoy MAT benefit at consolidated level till FY17. Hence the effective taxes for the company will approximately 20.01%. Wind power Capacity details Year FY97 FY05 FY06 FY06 FY07 FY08 FY10 FY11 Total Location Tamil Nadu 1 Tamil Nadu 2 Rajasthan Karnataka Gujarat 1 Gujarat 2 Tamil Nadu 3 Maharashtra No. of WEG'S 11 2 3 2 2 4 6 4 34 Installed Capacity (MW) 2.53 1.6 2.4 1.6 1.6 3.2 9.9 8 30.83 Investment (INR MN) 140.635 80.747 117.848 78.565 74 148 609 490 1738.8

Source: KSL Research, UIL

Plans for backward & forward integration UIL is currently focused on B2B segment, going ahead company intends to have backward & forward integration. This will be done by a way of acquiring mines and/or metal manufacturing plants. This strategy will help to secure the supply and pricing of products.

Khandwala Securities Limited

Ushdev International Limited

Valuation and Recommendation

Top line to grow at CAGR of 53% for next FY12-FY15E: Ushdev International Ltd has witnessed strong revenue CAGR growth of 53% over FY08-FY12 as compared to industry average of 10% over the same period. Going ahead company is expected to grow at 44% during FY12FY15E to INR 1,77,169 mn.

200 180 160 140 120 100 80 60 40 20 12 21 FY11

Sales Trends (INR Bn)

Domestic International

9.0 8.0 7.0 76 6.0 5.0

EBITDA Trends (INR Bn)

EBITDA EBITDA (%) 4.4% 4.2% 4.0%

5% 4% 4% 4%

56 40 22 37 FY12 51 101 71

4.0 3.0 2.0 1.0 3.7% 3.6%

4% 4%

FY13E

FY14E

FY15E

FY11

FY12

FY13E

FY14E

FY15E

Source : KSL Research, UIL

Source : KSL Research, UIL

We expect companys EBITDA to grow at CAGR of 33% during FY12-FY15E to INR 7,795 mn, on the back of strong contributions coming from the non-ferrous segment along with higher demand from domestic steel business. However the EBITDA margin is expected to remain same in the range of 4-4.5% for the same period. UIL reported a PAT of INR 723 mn for FY12 and is expected to achieve higher PAT of INR 2,785 mn by FY15E with CAGR growth of 57%, translated through lower interest cost due to proposed scheduled debt repayment in coming years.

PAT Trends (INR Bn)

3.0 2.5 2.0 1.5 1.0 0.5 0.0 FY11 FY12 FY13E FY14E FY15E 1.3% 1.2% 1.3% 1.4% PAT PAT (%) 2% 1.6% 2% 2% 1% 1% 1% 1% 1% 70% 60% 50% 40% 30% 20% 10% 0% FY11 29% 14%

RoE & RoCE Trends

RoE RoCE

58% 51% 37% 41% 26%

19%

19%

23%

FY12

FY13E

FY14E

FY15E

Source : KSL Research, UIL

Source : KSL Research, UIL

Higher PAT and debt repayment in coming years will translate into increase RoE & RoCE going ahead. Company has reported RoE & RoCE of 19% and 37% respectively in FY12. We expect these shareholder return ratios to scale higher in coming years on the back of higher profitability and scalability. As on Sept 2012 company debt stands at INR 2,900 mn, going ahead we expect company to repay its debt through cash generated from its operations. This will translate into lower D/E ratio by FY15E. Khandwala Securities Limited
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Ushdev International Limited

Debt Schedule (INR Bn)

3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 FY11 FY12 FY13E FY14E FY15E 1.00 0.80 0.60 0.40 0.20 FY11

Debt /Equity Trends (x)

0.94

0.55 0.42 0.29 0.20

FY12

FY13E

FY14E

FY15E

Source : KSL Research, UIL

Source : KSL Research, UIL

UIL handled 2.91 mn MT steel in FY12 and increased its share to 5.72% as compared to 4.37% in FY11. Anticipating the domestic steel demand to grow at a CAGR of ~8% during the period FY12-FY15E, we expect this will be beneficial for the company to capitalize the opportunity and enhance trading volume in the coming years. Having a positive outlook on the company we assume the top line for Ushdev to grow at 44% CAGR till FY15E which will take it to INR 1,77,169 mn and with stable EBIDTA margins in the range of 4.0-4.5%. However, as indicated repayment of debt in FY13E and FY14E will control the interest cost which will raise the net profit going ahead. At CMP of INR 230, Ushdev is trading at a P/E of 6.6x and 4.3x to its FY13E and FY14E EPS of INR 35 and INR 53.7. Historically the company has traded at one year forward rolling P/E multiple of 8x and EV/EBITDA multiple of 2.5x. We see the growth outlook to be positive and therefore we value the stock at 8x PE and 2.5x EV/EBITDA on FY14E derived prices target of INR 429, an upside of 87% from current levels. Valuation P/E CMP EPS P/E Targeted Multiple Fair Price
Source: KSL Research, UIL

Mar-14 230 54 4.3x 8.0x 429

EV/EBITDA EBITDA Targeted Multiple Derived EV No of Share (mn) Fair Price

Mar-14 5,315 2.5x 15,238 34 450

Peer Comparisons
Company Name Year CMP INR Net Sales INR mn 57,439 670,662 77,008 310,532 43,278 EBITDA INR mn 5,840 7,645 1,963 2,809 2,151 PAT INR mn 3,617 707 1,204 165 625 EPS INR EBITDA % PATM % ROCE % ROE % TTM P/E (x) 38.5 425.6 22.1 87.3 10.0 TTM EV/EBITDA (x) 39.5 148.5 13.7 12.2 3.5 P/BV (x)

Adani Ente. MMTC PTC STCI Ushdev

FY12 FY12 FY12 FY12 FY12

275 602 80 226 229

3.3 0.7 4.1 2.7 21.2

11.1 1.2 2.6 0.9 5.0

6.8 0.1 1.6 0.1 1.4

5.0 10.6 8.7 9.4 27.9

3.7 5.0 5.5 2.4 18.5

2.9 45.6 1.0 2.3 1.5

Source: KSL Research, UIL, Ace Equity

Investment Concern
Sharp fall in metal consumption: Trading in metals contributes significant portion of revenue; any changes or fall in consumption pattern will impact performance of the company. Pledged shares: 86.91% of promoters shares (41% of the total shareholding) have been pledged with banks for working capital purpose. Khandwala Securities Limited
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Ushdev International Limited

Industry Overview
Better demand outlook going ahead Global steel players have witnessed stressed situation in 2012, on the back of contracting demand in Europe, slower recovery in US, lower investment activity in Chinese region and declining growth rates in other regions translating to lower industry utilization rates. On the other hand overcapacity has forced majority steel player to postpone their expansion plans. Going ahead we expect outlook for steel industry to be better due to recovery from US and Chinese market. We expect the global steel production to grow ~4.5% YoY in 2013 (growth rates in China and world ex-China at 5% YoY and 3% YoY, respectively) and global utilization rates are likely to improve at ~79%.
Global Steel Production & Consumption Trends (Mn MT)
1,900 1,700 1,500 1,300 1,100 900 700 2000 2002 2004 2006 2008 2010 2012E 2014E Global steel Production Global steel Consumption

Global monthly Steel Production & utilization Trends (Mn MT)

135 130 125 120 115 110 105 100 Steel Prod Utilization 85% 80% 75% 70% 65% 60% Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12

Source : KSL Research, WSA

Source : KSL Research, WSA

Domestic Steel Industry The Indian steel industry ranks fifth in the world with an estimated crude steel production of 73 mn tonnes in FY12. Integrated steel producers contributed to 55% of the total crude steel production while the rest was contributed by secondary producers. During the period from FY98 to FY01, steel production witnessed a marginal growth of 3% CAGR. However, during FY02 to FY08, owing to boom in the infrastructure and automobile sectors, the industry witnessed a sharp turnaround and registered a CAGR of 13%. Domestic steel consumption to grow at a CAGR of 6% during FY11 FY15E Despite the gloom in the advanced and the European countries, domestic finished steel industry continued to register a strong growth during FY03 to FY11. Amid a sharp slowdown in the global demand (in the aftermath of the global financial crisis during FY09), the domestic finished steel industry along with China strongly contributed in the recovery in the global demand for the finished steel industry. Going ahead, we expect the Indian steel industry to grow at 6% during FY11-FY15E on the back of strong demand from domestic market especially from construction and automobile segment.
India Steel Production & Consumption Trends (Mn MT)
Steel Prod. Steel Cons. 80 60 40 20 0 2000 2002 2004 2006 2008 2010 2012E 2014E Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 (0.5) 0.5 5.0 -

100

India Steel Production & Consumption Trends (Mn MT)

10.0 Production (MT) Cons. (MT) 1.0

Source : KSL Research, JPC

Source : KSL Research, JPC

Khandwala Securities Limited

Ushdev International Limited

Company Description
Ushdev International Limited (UIL) incorporated in 1994, was promoted by Late Mr. Vijay Gupta, father of the present Vice Chairmen Mr. Prateek. Gupta. Under the dynamic leadership, the company has been able to grow by leaps & bounds and today is one of the largest metal traders and 3rd largest private sector trading company in India. It has presence in ferrous, non ferrous and raw materials trading. The company incepted with trading primarily in flat steel products and further extended to trading in raw materials including sponge iron, iron ore pellets, pig iron, metallurgical coal, etc and long products and subsequently to non ferrous metals such as copper, aluminum, zinc, brass and nickel. In FY12, UIL successfully traded in 2.9 mn tones of steel which is almost 5.72% of the total domestic consumption of 50.8 mn tonnes, given that the metal trading business is fragmented in nature. Even though UIL is among the largest trader of metals in India, the market share of the company in terms of total volumes of metals handled to the total Indian consumption of steel is quite low which indicates there is much more opportunity for the company to penetrate in this business. Over the years, Ushdev has also invested in wind power generation and currently has 34 wind energy generators at different locations across five states i.e. Tamil Nadu, Karnataka, Maharashtra, Gujarat and Rajasthan with a cumulative installed capacity of 30.83MW and an investment of INR 1,730 mn. Recently Oxley Securities, of Singapore has invested ~$26mn in the company that further strengthened its balance sheet. Ushdev was recently awarded the Best Trader -Exporter (Large) at the ECGC- D&B Excellence Awards 2012. Board of Directors Name Ms. Suman Gupta Mr. Prateek Gupta Mr. Narayan Hegde Mr. Vinay Kamat Mr. Suresh Lakhiani Mr. V.K Gupta Mr. Arvind Prasad Organization structure
Ushdev International Ltd

Indian Exporters

Designation Chairperson Vice Chairmen Non Executive Independent Director Non Executive Independent Director Non-Executive Independent Director Non-Executive Independent Director Managing Director

Ushdev (Singapore) Pte Ltd (WOS)

Ushdev Hong Kong Ltd (WOS)

UIL REP Office in Dubai

RAKFTZ Branch, Dubai

Source: KSL Research, UIL

Khandwala Securities Limited

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Ushdev International Limited

Power Generation Business UIL diversified into the wind energy business in the year 1997 after analyzing growth prospects and the fiscal support given to this Industry by the Government of India. Today, UIL is a well-known name in the Wind Power Industry. UIL generates 30.83 MW o power with windmill plans located in Tamil Nadu, Rajasthan, Gujarat, Karnataka and Maharashtra which were set up in 1997, 2005, 2006, 2007, 2009 & 2010. UIL has diversified the risk by spreading windmill locations into several states. UIL was the first company in India to complete its first Wind energy generation project in a record time of 67 days spread over 60 acres of land in Tamil Nadu on a complete turnkey basis, using German Technology UIL was the first company in India to get CBDT approval to raise funds for its wind energy business through tax free bonds under section 54 EA and EP to the tune of INR 600 mn in FY99 Major Milestones achieved Recent Ushdev was recently awarded the Best Trader-Exporter (Large) at the ECGC- D&B Excellence Awards 2012.

Indian Exporters

FY 2011-12 Ushdev for its Wind farm located at Chitradurga district at Karnataka has been awarded as the Best performing Wind farm in the 2 MW category for the year 2010-11 by Indian Wind Power Association. Ushdev has been ranked 215th by The Financial Express Magazine in its list of 500 Indias Finest Companies on the basis of net sales and ranked 493rd on the basis of market cap in their Feb 2012 issue. FY 2010-11 Ushdev has been included by Forbes Asia in its list of Asias 200 Best Under A Billion Companies. Ushdev has been included by Dun & Bradstreet (D&B) in Indias Top 500 Companies 2010 and is featured under the Trading sector. Ushdev for its Wind farm located at Chitradurga district at Karnataka has been awarded as the best performing Wind farm in the 2 MW categories for the year 2008-09 by Indian Wind Power Association. Ushdev has been ranked amongst the Top 40 metal trading companies in the world in terms of annual sales (source: Majestic Market Research Support Services Ltd). FY 2009-10 Ushdev has been ranked 297 by Business Standard magazine in their February 2010 issue on the basis of net sales. Ushdev has been ranked 6th by Business India magazine in their December 2009 issue on the basis Sales to Net Fixed Asset Ratio with 100% growth in FY 2008-09 compared to previousFY2007-08. The company has been ranked as the 180 company (among the top 1000 companies) by Business Standard, March 2009 on the basis of ranking by net sales. The company has been ranked as the 7th fastest growing company by the ET 500, October 2008. The company has been ranked 43 among the Top 100Wealth Creators by the ET. Ushdev has received the 38th rank by Business India on the basis of Sales to Assets Ratio in their December 2009 issue. FY 2008-09 The company for its Wind farm located at Chitradurga district at Karnataka has been awarded as the Best performing Wind farm in the 2MWcategory for the year 2006-07 and also for the year 2007-08 amongst the Wind farm located in Karnataka.

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Ushdev International Limited

KSL Ratings
Target Price refers to one year unless specified; LTP: Last Trading Price BUY: Expected return >15% ADD: Expected return 0-15% REDUCE: Expected decline 0-15% SELL: Expected decline >15%

Company Risk is based on the systematic risk of the stock. (1-year Beta) HIGH: >1.2 MEDIUM: 0.8-1.2 LOW: < 0.8
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