Jindal Stainless said to have raised ₹800 crore in priority funding

MUMBAI: Jindal Stainless Ltd (JSL), India’s largest stainless steel producer, has secured ₹800 crore in so-called priority funding from L&T Finance Ltd, two people aware of the development said. Priority funding allows a new lender to come in on the promise that it will be accorded higher priority during the payout phase, once a turnround is effected or the firm is liquidated.

In such transactions, existing lenders may cede charge on the assets in favour of a new lender, which has the first right on the company’s cash flows.

The funds will be used towards working capital needs and for capacity expansion, the people cited above said on condition of anonymity.

JSL, which has been in financial distress for the past few years returned to profitability in the third quarter of FY17, posting a net profit of ₹40.43 crore from a ₹134 crore loss a year earlier. In the quarter ended June 30, JSL posted a net profit of ₹41.50 crore on an income of ₹2,203.86 crore. It reported an income of ₹2,157.08 crore during the year-ago period.

JSL underwent corporate debt restructuring (CDR) in 2009 and since then, has been trying to cut debt and reduce interest costs. In 2014, it approached lenders with an asset monetisation plan, aiming to unlock the value of its operations and improve net worth.

Emails sent to JSL, L&T Finance remained unanswered till press time.