‘In future, we will be very conservative in borrowing’
The Jindal Steel and Power (JSPL) group, with a combined loan burden of ~46,500 crore, has stayed out of the Reserve Bank’s ‘top defaulters’ list. NAVEEN JINDAL, group chairman, talks to Dillip Satapathy on the subject and his plans to cut these liabiliti
Your company has been financially stressed for some years because of a high debt burden.
We never faced these problems earlier. But, after the coal block cancellations (part of the general order issued by the Supreme Court), we were made to pay an additional levy of ~3,500 crore. Contrary to the Comptroller and Auditor General’s recommendation for incentivising those who operated their blocks, we were unfairly penalised for producing.
So, we had to borrow ~3,500 crore, which today is more like ~6,000 crore. And, paying paying interest on it. This has been completely unproductive. So, a huge debt burden on us which we had a hard time serving for the past few years. In the future, we will be very careful, very
conservative, in borrowing. It’s not only us — everybody should be cautious about debt. Are you going to launch some sort of campaign against incurring of debt?
(laughs) A lot of people, whether farmers, students or businessmen, think when they take a loan that everything will go well and they will pay back. Sometimes, things don’t go well. And, the lender keeps mounting the pressure. Shakespeare had said, ‘Neither a borrow nor a lender be’. It is very important for people to realise the need to borrow really less. Wherever I get an opportunity to speak or talk to people or giving an interview, I must express this view.
How are you planning to cut your huge loan burden of ~46,500 crore?
The whole debt is not for steel. Of the ~46,500 crore total, ~8,500 crore is for Jindal Power, a subsidiary of JSPL, having a 3,400 Mw power plant in Chhattisgarh. Another ~14,000 crore is for international operations. We have a two million tonne steel plant in Oman, and coking coal mines in Mozambique and Australia. Only ~24,000 crore is for the standalone JSPL which has invested in steel operations in India. That way, it is not too much.
Any target for debt reduction?
It depends on so many factors. Other things being equal and the economy doing well, within four to five years we hope to be relatively debt-free. If the debt, whatever the total, comes down to less than 50 per cent of today’s level, we are in good shape. We hope to do this in the next five years. We have not made any bank lose anything and we are going to honour all our commitments. Whatever defaults were there have also come down. I am sure in a year’s time, we will start reducing our debt.
Is the newly commissioned Angul (in Odisha) steel project going to play a major role in these efforts?
We have spent more than ~30,000 crore at Angul. The plant was not earning anything. On the contrary, we have made a loss of ~7,000 to 8,000 crore here till date. Now, the blast furnace for 4.2 mt capacity has been commissioned. It will take some time to ramp up production. We hope in a couple of months this plant will start paying interest on the investment. Using the earnings from here and other places, we hope to reduce our debt and have a healthy balance sheet.