Speciality steel producer Usha Martin on Monday said its board decided to explore the sale of its steel business and constituted a committee to appoint investment banks and consultants to help evaluate proposals and oversee the potential sale process. In a stock exchange filing after a board meet of the company, Usha Martin said its board of directors inter alia reconstituted the “Committee of Independent Directors” for the potential sale of its steel business in order to achieve the objective of deleveraging the company. The company’s integrated steel plant near Jamshedpur has 1 million tonne annual capacity.
“The committee will be looking to appoint investment banks as early as possible,” a source close to the development told FE. According to the source, with the steel industry looking at brighter prospects this year, the board has decided to explore the sale of the company’s steel business to reduce huge long-term debt. The company has a total debt of over Rs 4,500 crore, most of which is long-term.
“The board today discussed the ongoing uncertainty of the wire rope business and concluded that currently good offers for this business are difficult to come. As the company’s steel division is doing well and also globally this sector is witnessing an upswing in activities, the management thought the company’s steel business would receive good response from major steel companies. And, the lenders’ representative on the board also supported this view of the management,” the source cited above said.
However, according to persons tracking the company, a sale of its steel business cannot go through unless two promoter factions settle their disputes. “There have been disputes over the steel division. There has been a demand for a forensic audit of the accounts of this division,” they said. Interestingly, there are two promoter factions at the company — Brij Jhawar and his son, Rajeev Jhawar, currently the managing director, on the one side, and chairman emeritus BK Jhawar and his son, Prashant Jhawar, on the other side.