Two more eye Usha Martin steel unit
Calcutta: Kalyani Group and Liberty House of UK may join the race to acquire the steel business from debt-laden Usha Martin Ltd.
The Usha Martin board, which met in a hurriedly called meeting on Monday, decided to set up a committee of independent directors, to evaluate proposals and oversee the process of sale of steel business of the company, a notice to the bourses said.
Tata Steel and JSW Steel had earlier showed interest in Usha Martin's one-million-tonne steel plant near Jamshedpur. The board meeting was called to initiate a formal process after the lenders and promoters of Usha Martin received multiple "feelers" from potential suitors.
"The company will appoint the investment bank, consultant and advisers to run the sale process. Both the lenders have received feelers from potential buyers," a source privy to the development said.
Liberty House, owned by UK-based businessman Sanjeev Gupta, has emerged as one of the most aggressive buyers in the metal space. It is bidding for Bhushan Power & Steel which is facing bankruptcy. A response from the company is awaited till the time of going to the press.
Kalyani Group, the Indian engineering behemoth which also produces speciality steel, also did not respond to the queries. In the past, the group had showed interest in having a foothold in the east and had signed an agreement with the Bengal government. But the plan did not materialise.
Prashant Jhawar, who is locked in a bitter legal battle over the control of the distressed steel, wire and wire rope maker, with his cousin brother Rajeev Jhawar, participated in the board meeting via video conference from London, where he is based.
Prashant had suggested that the promoters, Rajeev and he, should be on the committee that will oversee the sale to find a resolution. However, his request was turned down after Rajeev recused himself from being in the committee.
Hiving off the steel business to pare down debt that can potentially turn Usha Martin into a non-performing asset has been bothering the lenders, especially the SBI. However, no sale is possible unless the two promoters agree.
"The same independent directors had earlier failed to find a buyer for the wire and wire rope business. The induction of promoters in the committee was a reasonable demand. It needs to be seen if to sell steel or the entire company," a person, who identified with the Prashant Jhawar camp, said.
Prashant, who was removed as chairman of Usha Martin by independent directors, led by the SBI, in April 2017, has been seeking a forensic audit, especially of the steel business, and filed cases in the NCLT.
UML's interest cost was Rs 586.92 crore in 2017-18, compared to Rs 542.87 crore of operating EBIDTA.