The Usha MartinNSE 4.39 % board, which met in Delhi on Monday, formally decided to initiate the sale of its steel business to achieve the objective of deleveraging the company’s Rs 3,700-crore debt burden. The board created a six-member committee of independent directors to help evaluate proposals for sale of its steel business. This is likely to include bids from Tata Steel and JSW Steel who are believed to shown interest to acquire Usha Martin’s one million tonne per annum steels business in Jamshedpur. It has been entrusted with the task of appointing investment bankers and consultants and advisors to help evaluate the proposals and oversee the sale.
For UML which decided to cut down its debt by looking at sale of its wire ropes business a year and half back, this marks a shift in strategy. Listing out the reasons for this, a top source close to the developments said: “With a turnaround in the steel business cycle, there has been a considerable improvement in the valuation of steel assets. UML’s steel unit too has performed better. The board thus decided to move ahead and explore the sale of UML’s steel business to help reduce the debt.” In FY18, UML’s losses narrowed to Rs 282 crore from Rs 354 crore a year earlier, as revenues rose 24% to Rs 4,038 crore against Rs 3,246 crore a year earlier.
The move was also prompted by slow progress in the wire ropes sale initiative. “Also, since wire ropes is a global business and has historically been UML’s mainstay— the company started off in the 1960s as a wire ropes maker— the board felt it would be appropriate to retain it for the time being and instead scout for buyers for the steel unit,” the source added. The sale of the steel unit which makes automotive steel, forging quality and speciality steels, would include the company’s captive power unit and its coal and iron ore mines, the source added.
