organically & inorganically. However, as a company policy we would not like to comment on a speculative questions as it would be premature to do so till any of the deals being evaluated gets fructified,” a company spokesperson said.
A JSPL spokesperson said: “As part of monetisation plans already advised, we are looking at various options diligently to strengthen our balance sheets.”
Company officials maintained that JSPL’s financials have been adversely impacted due to the cancellation of coal blocks and payment of additional levy on coal of more than .₹ 3,300 crore during FY14-16 as a result of a Supreme Court order. Profitability of both its key steel and power businesses has been impacted on the back of acute coal shortage, falling realisation and no material improvement in utilisation of recently commissioned assets, they said.
Like most steel peers, the company is facing cash crunch due to the sharp fall in realisations on the back of industry slowdown and cheap imports from China, Japan, South Korea and Russia flooding the market. The firm’s power assets are housed under Jindal Power Ltd (JPL), a subsidiary of listed flagship JSPL.
The proposed divestment will help to bring down JSPL’s consolidated debt that at the end of FY16 is expected to cross .₹ 48,000 crore. Under the proposed deal, Jindal Power is likely to split vertically so that the Raigarh plant will be owned directly by JSPL, and the proceeds from its divestment will accrue directly to the parent company. ET reported about the impending deal on March 18.
On a standalone basis though, JPL has a better debt-equity profile than most of its peers. With an installed capacity of 3,400 MW, its total debt at the end of FY16 is expected to be at .₹ 6,708 crore.
Ratings agency Crisil Ltd has rated Jindal Steel and Power’s debt as default,