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Usha Martin mulls selling either steel or wire rope business

LiveMint logoLiveMint 21-09-2017 PTI

Kolkata: 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 on Thursday after the company’s annual general meeting (AGM).

Jhawar, who owns nearly 25% 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 Rs1,200 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 (earnings before interest, taxes, depreciation and amortization) 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 Rs3,800 crore including Rs500 crore in working capital. The other promoter-director Prashant Jhawar was absent at the AGM. Prashant Jhawar moved the NCLT (National Company Law Tribunal) challenging Rajeev Jhawar’s fund infusion into the company.

Prashant also holds around 25%. The next hearing is slated for 7 November. The leader of the lending consortium State Bank of India (SBI) had asked Prashant Jhawar to quit as chairman of the company on non-resolution on governance issues. Subsequently, he resigned.

Former Sebi (Securities and Exchange Board of India) and LIC chairman GN Bajpai was 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.

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