The Usha Martin board in a meeting held on Monday in Delhi decided formally to begin the process of selling its steel business with the aim of achieving its objective to get rid of the firm’s debt amounting to Rs 3,700 crore. The board came up with a committee consisting of 6 members to help with the evaluation of proposals to sell its steel business. It is expected that companies like JSW and Tata Steel will be bidding as they are interested in acquiring Usha Martin’s steel business in Jamshedpur producing 1million tonne/annum. It is given the responsibility of appointing consultants, investment bankers as well as advisors for helping to evaluate the overall sale along with the proposals.
For Usha Martin Limited which decided on cutting its debt amount by simply considering its wire rope business scenario about 1 and a half year back, this move marks a significant and strategic shift. While listing the probable reasons for this, a source close enough to this development was quoted saying, “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 Financial Year 2018, UML managed to cut down its amount of loss from Rs 354 crore in a year to Rs 282 crore in a year. And the company has also noticed a rise in its revenue from Rs 3,246 to Rs 4,038 in a year. This move was promoted also by the slow progress noticed in the company’s wire ropes sale initiative said an official. According to the board, since the company started business with the wire rope business, it would be wise enough to concentrate on the same to continue existence in the long run rather than looking around for customers for the steel business.