Calcutta, Aug. 28: Usha Beltron Limited (UBL), the Rs 1,500-crore Jhawar group flagship, expects to register a 15 per cent growth in its steel business during the current financial year.
UBL vice-chairman Prashant Jhawar said after the company’s annual general meeting that the steel sector was looking up in the last few months after a prolonged recession. The company hopes to grab the opportunities in order to fulfil its growth target.
But, Jhawar said, the overall growth in turnover may not be more than 4 per cent given the company’s decision to shift its entire telecom business from Ranchi to its subsidiary at Silvassa. “We have already decided to shift operations of the telecom business from Ranchi to Silvassa and the infrastructure and building would be utilised for further integrating the steel and steel wire business,” he said.
Jhawar also said that the company was in talks with the Jharkhand government for a lease agreement for mining iron ore and coal, which would substantially reduce production costs. “Our cost of production is still not at par with Tata Steel, as they have the added advantage of procuring raw materials at a lower cost from captive mines,” he said.
With the Jharkhand government looking for more private investment, UBL is in the process of entering into a long-term lease agreements for mines, he added. “I hope in the next 18 to 24 months, we will be able to report good news on acquiring mines,” he said.
The Calcutta-based wire rope manufacturer is also close to receiving a Rs 40-crore loan from the German financial institution DEG which will help it part finance its Rs 107-crore expansion projects at its plants in Ranchi and Jamshedpur.
“Talks are in an advanced stage for a loan of about Rs 40 crore after DEG completed due diligence. The proposal will go to the supervisory board in the third week of September and a formal announcement will come thereafter,” Jhawar said. He, however, was quick to mention that the DEG loan may be converted into equity at a later date.
The company had earlier negotiated with the International Finance Corporation, for a foreign currency loan equivalent to $ 21 million.
With the finalisation of the deal with DEG, the expansion project would have an ideal debt-equity ratio as the company would bring in Rs 25 crore from internal accruals, mainly from sale of non-remunerative assets and Rs 35 crore from issue of fresh equity.