Mumbai: International Finance Corporation (IFC), the private sector financing arm of the World Bank, is investing Rs 120.5 crore in Usha Beltron Ltd (UBL), a steel wire ropes and wires manufacturer.

The financial package drawn up between the IFC and UBL consists of Rs 17.5 crore in the form of equity participation. This entails a fresh issue of up to 5.35 million equity shares at a price of Rs 33 per share (a premium of Rs 28 for each share with a face value of Rs 5 each). On an increased equity of Rs 35 crore, IFC will hold 14.5 per cent of the paid-up capital. The balance of Rs 103 crore will be extended as a loan to the company.

This infusion of the funds is part of UBL’s Rs 252-crore investment plan over the next three years to strengthen its balance sheet, reduce the operating costs and increase the capacity utilisation from 72 to 80 per cent. This capital expenditure will include setting up a direct reduced iron plant for backward integration and building a captive co-generation power plant to produce power using cost-efficient and environment-friendly technology.

“IFC’s global expertise in manufacturing has benefited us immensely in focussing on our core business of steel wire ropes and wires. In this long-term partnership with IFC, we look forward to maintaining the best international standards in corporate governance and environmental and social responsibilities,” says UBL chairman B K Jhawar.

UBL has two main steel manufacturing facilities in Ranchi and Jamshedpur. It also has manufacturing subsidiaries in the UK and Thailand.