Usha Martin mulls selling either steel or wire rope business

25 September 2017

The leader of the lending consortium SBI has asked Prashant Jhawar to quit as chairman of the company on non-resolution on governance issues. Subsequently he resigned.

The Usha Martin Limited, currently in financial distress, is contemplating selling its wire rope or steel business for which it has appointed a consultant.

“We have hired a consultant which will prepare a roadmap for the company. Selling off one of two divisions (steel and wire rope) is also contemplated”, Managing Director of Usha Martin Rajeev Jhawar told reporters here today after the AGM.

Jhawar, who owns nearly 25 per cent of shareholding in the company, said the Royal Bank of Canada had been engaged as merchant banker which was expected to submit its report in two months.

He said the wire rope division contributed Rs 1200 crore in total revenue. The other steel division generated the balance two-thirds of the revenue, he said.

Jhawar said the company was looking at raising resources through asset sale and other means. The majority portion of resources raised would go towards paying off the debt which was eating into the company’s financials, he said.

Although the company had been making losses, both the wire rope and steel businesses were EBIDTA positive, he added.

“We will strategize after receiving the report and execution of the suggestion will be done within March next year”, he said.

The total debt burden stood at Rs 3800 crore including Rs 500 crore in working capital.

The other promoter-director Prashant Jhawar was absent at the AGM. Prashant Jhawar moved the NCLT challenging Rajeev Jhawar’s fund infusion into the company. Prashant also holds around 25 per cent. The next hearing is slated for November seven.

Former SEBI and LIC Chairman G N Bajpai were appointed as new chairman. Because of his indisposition, he could not attend the meeting.

Jhawar told the shareholders that the lenders were extending full support to the company.

Source-ET