KSL - Ushdev International Limited (IC) - 25 Jan 2013

7/28/2019 KSL - Ushdev International Limited (IC) - 25 Jan 2013

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January, 25th2013

Ushdev I nternational L td (UI L )

Rating: Buy Target Price: INR 429 Upside: 87% CMP: INR 230 (as on 25th January 2013)

InitiatingCoverage

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), www.thomsonreuters.com, www.capitaliq.com, www.themar

www.kslindia.com, www.moneycontrol.com, www.securities.com, www.valuenotes.com

This re ort is intellectual ro ert of Khandwala Securities Ltd; ueries on this re ort ma be directed to Head of Research at research kslindia.com

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 fivestates 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 hastraded 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.

Y/E MarRev

(INR mn)YoY(%)

EBITDA(INR mn)

EBITDA(%)

PAT(INR mn)

YoY(%)

EPS(INR)

RoE(%)

RoCE(%)

P/E(x)

EV/EBITDA(x)

FY12 59,469 79.2 2,155 3.6 723 65.4 24.6 18.8 36.7 9.4 3.3FY13E 90,392 52.0 3,616 4.0 1,185 63.9 35.0 18.9 41.2 6.6 2.0FY14E 126,549 40.0 5,315 4.2 1,817 53.3 53.7 22.7 50.9 4.3 1.1

FY15E 177,169 40.0 7,795 4.4 2,785 53.2 82.3 26.0 57.9 2.8 0.6

BSE NSE Bloomberg Reuters

511736 NA UTF IN USTFBO

Sensex USHDEV

52 Wk: Hi/Lo 20036/ 15748 340/186

Mkt Cap (INR Bn) 70679.5 7.7Equity (INR Mn) - 33.8

Mon. Avg.Volume 20720

Face Value (INR) - 10.0

* - TTM standalone basis ACE equity

Share Holding % Sept-12 June-12

Foreign 18.26 5.98

Institutions 0.06 0.04

Corporate 4.43 5.13

Promoters 47.58 54.69

Public & Others 29.67 34.16

Returns % Abs Relative to

Perf Sensex

1 Month -0.43 1.70

3 Months -13.39 5.50

1 Year -23.78 24.80

Relative Price Performance

Analyst -Harshad [email protected]

Financial Summary

-30%

-10%

10%

30%

50%

70%

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan

UIL SENSEX

0

10

20

30

40

50

60

175

195

215

235

255

275

295

315

335

Jan-12 Apr-12 Jul-12 Oct-12 Jan-13

Volume (000's) Price


2/12

Ushdev International Limited

Khandwala Securities Limited 2

Consolidated Financials (Y/E Mar)P&L (INR Mn) FY11 FY12 FY13E FY14E FY15ENet Sales 33,192 59,469 90,392 126,549 177,169Total Exp 31,980 57,313 86,776 121,234 169,373EBITDA 1,213 2,155 3,616 5,315 7,795Depreciation 76 92 103 108 114EBIT 1,136 2,063 3,513 5,207 7,682Interest 852 1,427 2,260 3,164 4,429

Other Income 256 229 229 229 229PBT 540 864 1,482 2,272 3,481Tax 103 141 297 455 697PAT 437 723 1,185 1,817 2,785

EBITDA Trends (INR Bn)

Balance sheet (INR Mn) FY11 FY12 FY13E FY14E FY15E

Share Capital 294 294 338 338 338Total Reserves 2,802 3,560 5,945 7,680 10,381Net worth 3,097 5,181 6,284 8,018 10,720Secu. Loans 747 1,369 985 528 204Uns. Loans 2,166 1,501 1,651 1,801 1,951Total Debt 2,913 2,870 2,636 2,329 2,154Total Liability 6,046 8,062 8,930 10,358 12,885

Net Assets 1,473 1,383 1,451 1,443 1,429Sundry Debtors 10,014 17,509 22,288 31,204 43,685

Cash and Bank 1,976 2,509 3,359 4,279 5,499Other CA 21 129 135 142 149Loans and Adva 6,654 6,429 6,750 7,088 7,442Total CA 18,815 26,579 35,033 45,213 59,276Trade Payables 12,856 18,424 26,003 34,671 46,112Other CL 1,382 1,465 1,538 1,615 1,696Provisions 3 12 12 12 12Total CL 14,241 19,901 27,554 36,298 47,821Net CA 4,573 6,679 7,479 8,914 11,455Total Assets 6,046 8,062 8,931 10,358 12,885

D/E Ratio (x)

Cash Flow (INR Mn) FY11 FY12 FY13E FY14E FY15E

Net CFO 248 60 3,748 4,724 6,157Cash Flow Invest. (1,079) (204) (171) (100) (100)Cash Flow Financial 1,082 247 (1,624) (1,981) (2,147)

Net Cash 251 103 1,953 2,643 3,910Key Ratios FY11 FY12 FY13E FY14E FY15E

No. of Share (mn) 29.4 29.4 33.8 33.8 33.8

P/E (x) 18.2 9.4 6.6 4.3 2.8

P/CEPS (x) 15.5 8.3 6.0 4.0 2.7

P/BV (x) 2.6 1.8 1.2 1.0 0.7

Mcap/Sales (x) 0.2 0.1 0.1 0.1 0.0

EV/Sales (x) 0.3 0.1 0.1 0.0 0.0

EV/EBITDA (x) 7.3 3.3 2.0 1.1 0.6

Diluted EPS 14.9 24.6 35.0 53.7 82.3

CEPS 17.5 27.7 38.1 56.9 85.6

Div./share (Rs) 2.1 2.1 2.1 2.1 2.1

BV (Rs.)105 131 186 237 317Cash/share (Rs.) 67.1 85.2 99.2 126.4 162.5

EBIDTA (%) 3.7 3.6 4.0 4.2 4.4

EBIT (%) 4.2 3.9 4.1 4.3 4.5

NPM (%) 1.3 1.2 1.3 1.4 1.6

RoE (%) 14.1 18.8 18.9 22.7 26.0

ROCE (%) 29.3 36.7 41.2 50.9 57.9

Deb. T/o (Days) 110 107 90 90 90

Crd. T/o (Days) 141 113 105 100 95

Inv. T/o (Days) 2 0 10 7 5

D/E Ratio 0.9 0.6 0.4 0.3 0.2

Int. cove. Ratio 1.4 1.5 1.6 1.7 1.8

RoE & RoCE (%)

3.7%3.6%

4.0%

4.2%

4.4%

4%

4%

5%

5%

-

1.0

2.0

3.0

4.05.0

6.0

7.0

8.0

9.0

FY11 FY12 FY13E FY14E FY15E

EBITDA EBITDA (%)

0.9

0.6

0.4

0.3

0.2

-

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0


14%19% 19% 23%

26%29%

37%41%

51%

58%

0%

10%

20%

30%

40%

50%

60%

70%


RoE RoCE


3/12



Q3FY13E Result Preview (INR mn)Income statement Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13E YoY QoQ

Net Sales 11,808.6 11,987.3 13,866.9 20,824.4 16,049.7 19,069.5 21,775.0 57% 14%

Total Expenditure 11,382.5 11,506.2 13,408.1 20,004.9 15,454.5 18,706.2 21,208.5 58% 13%

EBITDA 454.8 481.1 524.9 685.2 595.2 363.4 566.5 8% 56%

EBITDA (%) 3.9% 4.0% 3.8% 3.3% 3.7% 1.9% 2.6% -118 bps 70Depreciation 23.1 23.2 23.1 23.0 23.1 21.8 22.2 -4% 2%

EBIT 431.8 457.9 501.7 662.2 572.1 341.6 544.3 8% 59%

Other Income 17.5 - 1.7 220.9 175.2 343.1 171.6 9992% -50%

Interest 289.7 329.2 320.2 494.6 449.0 430.3 451.8 41% 5%

PBT 159.6 128.6 183.3 388.4 298.3 254.4 264.0 44% 4%

Tax 31.8 4.2 33.9 70.3 58.9 45.7 47.5 40% 4%

Profit After Tax 127.8 124.4 149.4 318.1 239.5 208.8 216.5 45% 4%

PAT (%) 1.1% 1.0% 1.1% 1.5% 1.5% 1.1% 1.0% -8 bps -10

Equity Capital 294.3 294.3 294.3 294.3 294.3 338.5 338.5 15% 0%

EPS 4.3 4.2 5.1 10.8 8.1 6.2 6.4 26% 4%

Source: KSL Research, UIL

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 INR21,775 mn, due to higher volume from both ferrous and non ferrous segments in addition to highercontribution from the Hong Kong subsidiary.

The expected EBITDA is INR 566.5 mn during Q3FY13E due to higher contribution from non ferroussegment. 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 duringthe quarter which leads to an increase of 45% on YoY and 4% on QoQ basis.

Quarterly consolidated sales trend (INR Mn) Quarterly PAT trend (INR Mn)

Source: KSL Research, UIL Source: KSL Research, UIL

0

5,000

10,000

15,000

20,000

25,000

Q1FY11 Q3FY11 Q1FY12 Q3FY12 Q1FY13 Q3FY13E

1.7%

2.1%

1.1%

0.9%

1.1%1.0%1.1%

1.5%

1.5%

1.1%1.0%

1%

1%

1%

1%

1%

2%

2%

2%

2%

2%

0

50

100

150

200

250

300

350

Q1FY11 Q4FY11 Q3FY12 Q2FY13

PAT PAT (%)


4/12



Investment RationaleDe-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


Focus on international markets

UIL has established strong linkages not only in domestic markets but also in international markets overdecades. It routes 45% of its products from/to more than 28 different international destinations. To leveragethis relation and reduce dependency on domestic markets, company is tapping international markets byventuring into trading of Non-ferrous segment (i.e. high value transactions) through its overseassubsidiaries 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) % holding Sales PAT PAT (%)

UIL Singapore PTE Ltd 100% 7624 52.5 0.7%

UIL Hong Kong Ltd 100% 9855 51.2 0.5%Source: KSL Research, UIL


5/12



Diversified product portfolioAs 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 metalsector worldwide. This resulted in grabbing of high value international trades especially in the Non Ferroussegment.Currently it is present in the entire metals value chain by further diversifying its product basket by trading inraw materials such as metallurgical coal, coke, sponge iron, pig iron, steel scrap and liquid metal. Further thecompany is also exploring the possibility of trading in scarce products like silica, tin, etc., which will add bettermargins to the company and also increase customer base at global level, compared to other commodityproducts.The shift in product portfolio that fetches higher trading margins has helped UIL to maintain its EBIDTAmargins, even though there is a drop in margins of ferrous flat products. Seeing the inherent nature of metaltrading business the margins are always expected to remain low in the range of ~3.5% to 4.0%, but ascompared to peers it also boasts one of the highest margins in trading business.

Companys Product Portfolio:



6/12



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 adiversified 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 shareaggregating to USD 26 mn.The objective of this investment is to leverage both companies businesses from the mining and tradingsegment. Since Oxley Group has acquired Coal, Nickel, Gold mines in Indonesia, Magnolia, Malaysia, andAustralia and Ushdev International Limited has been already in trading business of Metal Value chain, weexpect 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 thecompany to reduce its effective tax rate and enjoy MAT benefit at consolidated level till FY17. Hence theeffective taxes for the company will approximately 20.01%.

Wind power Capacity details

Year Location No. of WEG'S Installed Capacity (MW) Investment (INR MN)

FY97 Tamil Nadu 1 11 2.53 140.635

FY05 Tamil Nadu 2 2 1.6 80.747

FY06 Rajasthan 3 2.4 117.848

FY06 Karnataka 2 1.6 78.565

FY07 Gujarat 1 2 1.6 74

FY08 Gujarat 2 4 3.2 148

FY10 Tamil Nadu 3 6 9.9 609

FY11 Maharashtra 4 8 490Total 34 30.83 1738.8


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.


7/12



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 FY12-

FY15E to INR 1,77,169 mn.

Sales Trends (INR Bn) EBITDA Trends (INR Bn)

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 FY15Ewith CAGR growth of 57%, translated through lower interest cost due to proposed scheduled debt repayment

in coming years.

PAT Trends (INR Bn) RoE & RoCE Trends


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 returnratios 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 debtthrough cash generated from its operations. This will translate into lower D/E ratio by FY15E.

2137

51 71

101

12

22

40

56

76

-

20

40

60

80

100

120

140

160

180

200


Domestic International

3.7%3.6%

4.0%

4.2%

4.4%

4%

4%

4%

4%

4%

5%

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0


EBITDA EBITDA (%)

1.3%

1.2%

1.3%

1.4%

1.6%

1%

1%

1%

1%

1%

2%

2%

2%

0.0

0.5

1.0

1.5

2.0

2.5

3.0


PAT PAT (%)

14%19% 19%

23%26%

29%

37%41%

51%

58%

0%

10%

20%

30%

40%

50%

60%

70%


RoE RoCE


8/12



Debt Schedule (INR Bn) Debt /Equity Trends (x)


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 Mar-14 EV/EBITDA Mar-14CMP 230 EBITDA 5,315EPS 54 Targeted Multiple 2.5xP/E 4.3x Derived EV 15,238Targeted Multiple 8.0x No of Share (mn) 34Fair Price 429 Fair Price 450


Peer Comparisons

CompanyName

Year CMPINR

NetSalesINRmn

EBITDAINRmn

PATINRmn

EPSINR

EBITDA%

PATM%

ROCE%

ROE%

TTMP/E(x)

TTMEV/EBITDA

(x)

P/BV(x)

Adani Ente. FY12 275 57,439 5,840 3,617 3.3 11.1 6.8 5.0 3.7 38.5 39.5 2.9

MMTC FY12 602 670,662 7,645 707 0.7 1.2 0.1 10.6 5.0 425.6 148.5 45.6

PTC FY12 80 77,008 1,963 1,204 4.1 2.6 1.6 8.7 5.5 22.1 13.7 1.0

STCI FY12 226 310,532 2,809 165 2.7 0.9 0.1 9.4 2.4 87.3 12.2 2.3

Ushdev FY12 229 43,278 2,151 625 21.2 5.0 1.4 27.9 18.5 10.0 3.5 1.5

Source: KSL Research, UIL, Ace Equity

Investment ConcernSharp fall in metal consumption: Trading in metals contributes significant portion of revenue; any changes orfall 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 forworking capital purpose.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5


0.94

0.55

0.42

0.290.20

-

0.20

0.40

0.60

0.80

1.00



9/12



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 torecovery 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)

Global monthly Steel Production & utilizationTrends (Mn MT)

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) India Steel Production & Consumption Trends(Mn MT)

Source : KSL Research, JPC Source : KSL Research, JPC

700

900

1,100

1,300

1,500

1,700

1,900

2000 2002 2004 2006 2008 2010 2012E 2014E

Global steel Production Global steel Consumption

60%

65%

70%

75%

80%

85%

100

105

110

115

120

125

130

135

Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12

Steel Prod Utilization

0

20

40

60

80

100

2000 2002 2004 2006 2008 2010 2012E 2014E

Steel Prod. Steel Cons.

(0.5)

-

0.5

1.0

-

5.0

10.0

Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12

Production (MT) Cons. (MT)


10/12



Company Description

Ushdev International Limited (UIL) incorporated in 1994, was promoted by Late Mr. Vijay Gupta, father of thepresent Vice Chairmen Mr. Prateek. Gupta.

Under the dynamic leadership, the company has been able to grow by leaps & bounds and today is one of thelargest 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 primarilyin 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 domesticconsumption of 50.8 mn tonnes, given that the metal trading business is fragmented in nature. Even though UILis among the largest trader of metals in India, the market share of the company in terms of total volumes ofmetals handled to the total Indian consumption of steel is quite low which indicates there is much moreopportunity for the company to penetrate in this business.

Over the years, Ushdev has also invested in wind power generation and currently has 34 wind energygenerators at different locations across five states i.e. Tamil Nadu, Karnataka, Maharashtra, Gujarat andRajasthan 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 itsbalance sheet.

Ushdev was recently awarded the Best Trader-Exporter (Large) at the ECGC- D&B Indian ExportersExcellence Awards 2012.

Board of Directors

Name Designation

Ms. Suman Gupta ChairpersonMr. Prateek Gupta Vice Chairmen

Mr. Narayan Hegde Non Executive Independent Director

Mr. Vinay Kamat Non Executive Independent Director

Mr. Suresh Lakhiani Non-Executive Independent Director

Mr. V.K Gupta Non-Executive Independent Director

Mr. Arvind Prasad Managing Director

Organization structure


UshdevInternational

Ltd

Ushdev(Singapore) Pte

Ltd

(WOS)

RAKFTZBranch,

Dubai

Ushdev HongKong Ltd

(WOS)

UIL REP Officein Dubai


11/12



Power Generation Business

UIL diversified into the wind energy business in the year 1997 after analyzing growth prospects and the fiscalsupport given to this Industry by the Government of India. Today, UIL is a well-known name in the WindPower Industry.

UIL generates 30.83 MW o power with windmill plans located in Tamil Nadu, Rajasthan, Gujarat, Karnatakaand Maharashtra which were set up in 1997, 2005, 2006, 2007, 2009 & 2010. UIL has diversified the risk byspreading windmill locations into several states.

UIL was the first company in India to complete its first Wind energy generation project in a record timeof 67 days spread over 60 acres of land in Tamil Nadu on a complete turnkey basis, using GermanTechnology

UIL was the first company in India to get CBDT approval to raise funds for its wind energy businessthrough 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 Indian ExportersExcellence Awards 2012.FY 2011-12

Ushdev for its Wind farm located at Chitradurga district at Karnataka has been awarded as the Bestperforming 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 FinestCompanies 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 annualsales (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 ofnet sales.

Ushdev has been ranked 6th by Business India magazine in their December 2009 issue on the basis Salesto 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 BusinessStandard, 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. Thecompany 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 theirDecember 2009 issue.

FY 2008-09

The company for its Wind farm located at Chitradurga district at Karnataka has been awarded as theBest performing Wind farm in the 2MWcategory for the year 2006-07 and also for the year 2007-08amongst the Wind farm located in Karnataka.


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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 thestock. (1-year Beta)

HIGH: >1.2

MEDIUM: 0.8-1.2

LOW: < 0.8

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KSL - Ushdev International Limited (IC) - 25 Jan 2013

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