 "JSPL to reschedule foreign banks' debt in 4-6 weeks")
It is expected to get a new repayment reschedule in the next four to six weeks.
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"We have amicably rescheduled our 30 per cent loan (on the steel business) with these (foreign) banks and are in the process of rescheduling the remaining 70 per cent debt in the next one or a month-and-a-half," Ravi Uppal, the chief executive officer of the company told Business Standard on Thursday. "We have also already rescheduled our $25-million loan with the Japanese bank," he added. With this, the debt-laden company has put to rest the possibility of a recall of loan by these lenders. On March 31 last year, JSPL had a consolidated net debt of Rs 45,500 crore. Of the total debt, the company's steel business has a Rs 28,313-crore loan.
The remaining loan has been incurred by the power business of the company.
"There is just no question of recall of loans by foreign lenders. Banks are co-operating with us for rescheduling of loans," said Uppal.
According to reports, a group of foreign lenders were evaluating possibilities to recall loans adding to $550 million from Jindal Steel after it failed to comply with loan terms ahead of the repayment schedule starting in April. The move it seems was triggered after the company failed to service the $25 million unsecured loan from a large Japanese bank.
"Majority of the company's steel business loan has been taken from domestic lenders and the amount from foreign lenders is not too high," informed Uppal without divulging absolute figures.
For the loan extended by domestic banks, Jindal Steel is looking to get its repayment tenure extended through the "5/25" route.
"Considering negative financial results in the last 12 months, the company has been working with all banks and institutions towards various options including the "5/25" scheme to meet all obligations," said an exchange notification on Thursday.
While Jindal Steel remains engaged in buying more time to service its huge debt, it has simultaneously chalked out a roadmap to improve the topline and get access to funds as it aims to pare the consolidated debt by Rs 15,000-20,000 crore.
"We are examining our domestic steel assets worth Rs 25,000 crore for full as well as part divestment in order to improve our cash flows," said Uppal.
Under the part divestment plan, Jindal Steel is in advance talks with foreign companies to sell stake in two of its steel projects in order to raise funds. The company is also looking for investors for its captive power assets (part of steel business).
"We will have a controlling stake in all the joint ventures we are planning to have but with stake sale capital will be available for us. All deals put together, we intend to complete our divestment plan within next two to six months," said Uppal.
For its power business, Jindal Steel has planned to sell it off and has received five bids which is combination of domestic as well as overseas entities.
"We are still evaluating and have not zeroed down any company as yet," he said.
Jindal Steel's captive power plants are located in Raigarh (Chhattisgarh) and Angul (Odisha) where its houses most of its steel facility.
On the operational front, post imposition of the minimum import price (MIP) on several steel products, Jindal Steel sees a good opportunity for improving its topline. Alongside, the company plans to continue efforts to lower its expenses in order to maintain margins that could help service the debt.
"We are aiming for an Ebitda margin of 25 per cent in the long-term as the domestic steel business is now looking positive after the MIP," said Uppal.
Jindal Steel's standalone topline, which is mainly the steel business, has been declining for the last three years with bottomline getting weaker as most portion of the operating profits is getting eaten up by the interest. The company's (standalone) debt equity has only been on the rising side as it stood at 2.06 as on March 31, 2015. The picture is no better on a consolidated basis either. Though the topline has remained stagnant past three years, operating margins have dropped significantly, taking the company into a loss in the year gone by.
Meanwhile, analysts are of the view that the company's plan to power assets can fetch a replacement amount of Rs 18,000-20,000 crore and should be able to help lighten the balance sheet.
"For its power plant, Jindal Steel already has the coal sourcing (through linkages and e-auctions) and is also a running (generating) power asset," said Giriraj Daga, portfolio manager with SKS Capital & Research. "The company's steel business also has the scope to get on to its feet from first quarter of next fiscal as the MIP benefit will begin to show in the earnings," he added.