Home-grown steel major, Jindal Steel & Power Ltd (JSPL), aims to be net debt-free by FY23. The company’s wholly-owned subsidiary, Jindal Steel & Power (Mauritius), has prepaid a loan of $ 357 million ( ₹2,711 crore).
This prepayment will help clear the entire debt of the Mauritius subsidiary. The loan had corporate guarantees from JSP India, which will also get released.
Jindal Steel & Power (Mauritius) is the holding company of JSPL’s overseas mines and mineral assets. The loan was taken for acquiring mines and other mineral assets to provide raw material security, primarily to JSPL’s India operations.
Post prepayment, JSPL’s overseas debt will come down to ₹987 crore ($130 million). It was at ₹13,670 crore ($1.8 billion) three years back.
“The group plans to repay this loan (overseas debt) by September 2022 and be net debt free by March-end 2023,” VR Sharma, Managing Director, JSPL, said.
The bulk of JSP’s overseas debt now sits in its Australian subsidiary, to ₹858 crore ($113 million).
In September 2021, JSPL announced a pre-payment of ₹806 crore ( $106 million) to the lenders of its arm Jindal Steel & Power (Australia) Ltd.
According to Sharma, the company is pre-paying lenders to further strengthen the balance sheet and be net debt free through accelerated deleveraging.
JSPL’s net debt has come down from its peak of Rs 46,500 crore to Rs 10,981 crore by September 30, 2021 (half-year ending of FY22). Analysts point out that the net debt to EBITDA ratio, which was at 1.5 times at the start of the financial year, should improve to 0.6 times by FY22 end.
Debt levels of Jindal Steel and Power Ltd (JSPL) could likely be at Rs 5,000 crore by the end of March 2022, as per analyst estimates.
“We are on course to expand our steel-making capacity to 15 MTPA by 2025, with an estimated investment of Rs 20,000 crore”, the MD added.
Incidentally, JSPL had a week back declared its first dividend in eight years. The company’s board approved an interim dividend of Re 1 per equity share for the ongoing financial year. This is its first interim dividend since 2008 and its first dividend since 2014.
The decision, market sources say, was aimed at indicating the strengthening balance sheet of the company as well as its improved cash flows.