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The promoters of Jindal Stainless (Hisar) Ltd (JSHL) and Jindal Stainless Ltd (JSL) are evaluating options to once again merge the two listed entities in a bid to leverage the stronger balance sheet of the merged entity.
Senior JSL officials told BusinessLine the company is likely to take a call on this by December, after consultation with lenders and while keeping in mind the interest of shareholders. JSL had completed its exit from the Corporate Debt Restructuring (CDR) framework this March.
A few years back, the two were demerged to prevent the project execution delays of JSL’s large greenfield project in Odisha from affecting the good operating assets in Hisar.
Synergies ahead
“There are a lot of further synergies that can be created. There are a lot more compliance issues created with having two companies. Operationally everything will smoothen out because we are one organisation with the same product,” said Abhyuday Jindal, Managing Director at JSL.
“There could be some negative factors from a finance point of view. But operationally there are a lot of benefits in merging the organisation. It becomes a sizeable entity. We will be able to create better value and our negotiating power with customers, vendors and logistic providers increases. Right now, the volumes look smaller because we are being looked at as two separate companies; so, with a sizeable company, costs further come down and optically it is much better,” Jindal added.
“We are evaluating multiple corporate actions; we are specifically evaluating them from the shareholder and lender perspective. There should be clarity on this by the end of this calendar year. By December we should be able to work out what is the best approach,” said Anurag Mantri, Group Chief Financial Officer at Jindal Stainless Group.
Debt position
Commenting on the present debt position of the two entities, Mitra said: “JSL has a debt of ₹3,500 crore. This includes ₹900-crore debt from JSHL to JSL. JSHL has debt of ₹2,400 crore.”
“Minority shareholders also stand to benefit because they become part of a larger entity. We are currently taking the views of lenders and shareholders. It could also remove the related party transaction concerns. We are discussing how best we should go about it and evaluating any other options too,” he added.
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