Usha Martin chairman B.K. Jhawar (centre) in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, Sept. 28: Usha Martin Ltd is setting up a joint venture company with Austrian speciality wire rope manufacturer Jo Pengg AG at an initial investment of $5-7 million.

The Jhawars-owned company is also in the last lap of finalising its 10000-tonne greenfield plant in the US.

Jo Pengg executives will visit the city next week to finalise the contours of the joint venture, P. Bhattacharya, joint managing director of the company, said after the extraordinary general meeting here today.

The unit will be located in the Ranchi-Jamshedpur area where Usha Martin has a plant.

The Indian company will manage the unit and provide raw materials for valve and clutch wire for automobiles, while Jo Pengg will provide the technology.

The global market for these high-value wires is about 120,000 tonne. The JV plans to make 10,000 tonne wires in two phases. It is targeting to sell 4,000 tonnes in the next 2-3 years in India.

After the JV is set up, the Austrian company will stop exporting here. Jo Pengg has a 25 per cent market share in India.

Talking about the US plans, Rajeev Jhawar, managing director of Usha Martin, said the company would invest about $5 million for the US facility, which might come up in Houston.

Usha Martin shareholders have approved the issuance of global depository receipts (GDR) and warrants to promoters.

The company plans to invest Rs 462 crore for expansion. Of this, Rs 220 crore will come from GDR/FCCB and the rest through preferential allotment to promoters.

Following the expansion of the equity, promoters’ holding will remain same as proceeds from the preference offer and GDR will be equal. The GDR/FCCB will be listed on the Luxembourg Stock Exchange.

The expansion programme includes stepping up the speciality steel making capacity, creating backward linkage of coal and iron-ore mining and power co-generation plan.