Usha Martin managing director Rajiv Jhawar (right) with joint managing director P. Bhattacharya in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury

Calcutta, May 13: Wire rope manufacturer Usha Martin Ltd plans to seek duty relief on exports to subsidiary companies.

The company exports 30,000 tonnes of wire rod to its subsidiary in Thailand, Usha Siam Steel Industries Public Company Ltd, where the rods are converted to wire and wire ropes. The export will now attract a 10 per cent duty, which is likely to impact the margins of the Thai company.

The Centre has decided to impose export duty on steel and steel products despite the promises made by leading steel companies to reduce domestic rates by Rs 4,000 a tonne.

“We are hopeful that the government will relook the export duty issue. In case nothing changes, we will plead exemption of duty on sale to subsidiary companies,” Rajeev Jhawar, managing director of Usha Martin, said.

While Usha Martin’s exports are limited to Thailand, other major steel makers could be in a bigger trouble.

Many companies such as JSW Steel and Tata Steel follow a deintegrated manufacturing strategy whereby cheap semi-finished steel is produced in India and then exported to overseas mills where they are processed for sale in the developed markets. Such a strategy may have to be reworked if the import duty stays.

Net sales

Usha Martin, which makes speciality steel, wire and wire ropes, reported a 35 per cent growth rate in net sales at Rs 672.5 crore for the quarter ended March 31 over Rs 498.71 crore in the year-ago period.

Profit grew 29 per cent to Rs 50.52 crore from 39.29 crore.

For the year 2007-08, net sales rose 17.5 per cent to Rs 2,308.77 crore, while profit increased 27.6 per cent to 175.38 crore.

The company has embarked on a Rs 2,100-crore expansion plan to increase its capacity to 1 million tonnes from 350,000 tonnes in two phases. It has already spent Rs 800 crore.

By November, the steel making capacity will go up to 700,000 tonnes. The expansion will be completed in two years. The benefits from the expansion will be reflected in the next fiscal.