Usha Beltron Ltd (UBL), the flagship company of the Rs 1300-crore Jhawar group, has lined up a Rs 120 crore expansion plan to enhance capacity as well as reduce average cost of production.
Vice-chairman Prashant Jhawar today announced in a tele-conference that, by virtue of the capital injection, the expansion plan would eventually reduce the cost of interest and improve the debt-equity ratio of the company. Multilateral funding agency IF Washington and the promoters have agreed to acquire premium preferential shares worth $3.6 million each to fund the project. The balance $21 million would be provided by IFC through 11-year debentures at a coupon rate of Libor plus 270 basis points.
The expansion plan would help the company produce 1 lakh tonne per annum DRI (direct reduced iron) expand heat treatment and bright bar making facilities for automotive grade steel, set up a steel cord plant for conveyor belt reinforcement, balance wire rope capacity and produce high-value wire products.
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The financial restructuring, to be complete in three months, would reduce the debt-equity ratio from the present 2.45:1 to 1.95:1 and would help the company reduce cost of interest by Rs 5 crore a year from the present annual outgo of Rs 80 crore.
Jhawar hoped the restructuring would help the company maintain debt-equity ration of 1:1 within 5 years.
IFC and the promoters would acquire 53.45 lakh preferential shares for Rs 33 each. The face value of the UBL scrip if Rs 5. With the acquisition, IFC would hold a 14.5 per cent stake in the company while the promoters stake would go up to 32 per cent on the company