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Ratan Jindal-led Jindal Stainless Ltd has decided to go in for a restructuring and asset monetisation programme to pare debt.
As part of the scheme, the company’s stainless steel manufacturing facility in Hisar, Haryana, will be demerged into Jindal Stainless (Hisar) Ltd and subsequently be listed on the stock exchanges.
The hot-strip plant in Odisha will be transferred to Jindal United Steel Ltd, and the coke oven plant in the state will be transferred to Jindal Coke Ltd.
The company will look for potential buyers for these assets.
“The demerger of the steel facility will bring down debt by ₹5,000 crore. If the Odisha plants are sold, the debt reduction will be much more,” a company spokesperson said.
The company had total borrowings (long-term and short-term) of ₹10,911.53 crore as on March 31, 2014.
“We expect the asset monetisation programme to improve the financial health of the company, reduce our debt and provide better operational efficiencies,” said JP Verma, Executive Director and Chief Financial Officer, Jindal Stainless.
“For the monetisation of assets, there will be a demerger/slump sale to the subsidiaries which will become effective upon High Court approval. This is an enabling structure to bring in potential investors going forward,” he added.
The pricing pressure exerted by cheaper Chinese imports has resulted in Jindal Stainless incurring losses since 2012.
This has led to the erosion of the company’s four-year peak net worth by 92 per cent. As on March 31, its net worth was ₹185.85 crore, while its peak was ₹2,252.89 crore, four years ago. The company had reported ₹103.90 crore loss in 2011-12, which increased to a ₹820.82 crore loss in 2012-13 and ₹1,390.09 crore loss in 2013-14.
Despite being the third largest producer of stainless steel in the world, Chinese imports have risen over eight times in the last five years, putting pressure on domestic manufacturers.
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