Calcutta, Aug 23: German financial institution DEG is likely to acquire a 14 per cent stake in Usha Beltron Ltd (UBL), the Rs 1,500-crore flagship of the Calcutta-based Jhawar group.
Sources said the DEG has already expressed its satisfaction over the UBL facility in Jamshedpur and talks are on regarding an equity participation.
The participation of DEG in UBLís equity will help the Indian outfit part finance its investment for expansion of the Jamshedpur wire rope plant and retire high-cost debt.
Sources however noted that DEG is interested in investing around Rs 45 crore in UBL. The Industrial Development Bank of India (IDBI) may also extend soft loan to the company.
The Jhawar group is raising its stake in the company from 23 per cent to over 32 per cent by acquiring 53,45,455 equity shares of Rs 5 each at a premium of Rs 28. The total investment will be over Rs 17.6 crore.
The company has also lined up an equal investment from International Finance Corporation( IFC) of Washington in its equity. The financial institution will have a 15 per cent stake in the steel maker with this investment. IFC has also sanctioned a $ 21 million loan to UBL for its proposed Rs 120-crore investment towards setting up of a one lakh tonne sponge iron plant and expansion of its captive power generation capacity by 10 MW.
ďAll put together, the company is poised to raise around Rs 262 crore in the current financial year. While Rs 120 crore will be spent for capacity expansion, the remaining funds will be utilised to retire part of the high-cost loan,Ē they added. UBL vice-chairman Prashant Jhawar had earlier said the IFCís participation in the company through equity and debt would help it streamline its debt equity ratio and generate more cash flow in the long run.