Speciality steel firm Mukand, controlled by the Bajaj and Shah families, is restructuring. The company, which produces steel for the automobile and manufacturing industries, will focus on the high-end segment and may hive off divisions that do not make profits.
And in a major managerial change, Rahul Bajaj has stepped down as chairman of the company. Niraj Bajaj has been appointed as the new chairman and Rajesh Shah as co-chairman. The Shah and Bajaj families control over 80 per cent in Mukand, with each holding a little over 40 per cent.
"Now, our focus will be on the steel and industrial machinery divisions. Given India's strong growth prospects we expect our core business can make value out of it," Rajesh Shah said. Mukand sells 65 per cent of its steel production to the automobile sector and the rest to manufacturing and industrial production companies.
Mukand wants to take a closer look at its road laying business, which is losing money despite an infrastructure boom in the country. "There are a lot of jobs pending in the road construction business. They will take at least six months to complete and then we will take a call on what to do with that division," Shah said. The division recorded a 24.5 per cent decline in revenue in 2006-07 at Rs 90.33 crore against Rs 119.59 crore posted a year ago.
However, Mukand is planning Rs 300 crore capital expenditure to increase its steel capacity by 80 per cent to 540,000 tonnes by the next March. The funds will come from internal accruals and will be spent on the greenfield project in Lonand, Satara.
"Prices of raw materials, including metallurgical coke and iron ore, have increased dramatically. We are thinking of better utilisation of raw materials besides looking for domestic iron ore assets," Shah said.
Asked whether the appointment of Niraj Bajaj as chairman would give the Bajaj family a greater say in management, Shah said both families were so close that there would not be any issues.