Lenders working on Jindal Stainless restructuring plan: CMD

A consortium of lenders is working on a "major restructuring" plan for Jindal Stainless to help it enhance its falling networth and make viable the country's largest producer of stainless steel.
"Banks constituting a large consortium are working on the restructuring of the company and it is not a normal CDR (corporate debt restructuring), it is a major restructuring," the company's Chairman and Managing Director Rattan Jindal said here today.
"We are still trying to work out with the banks about the restructuring of the company. So, let's see...We are yet to finalise the plan," he said on the sidelines of 25th anniversary of Indian Stainless Steel Development Association.

Jindal Stainless, which has a total debt of Rs 14-15,000 crore, has been into deep waters with the erosion of over 90 per cent of its four-year peak networth that has been pushing it into the "potentially sick" unit category.
The company's Board had in February constituted a "reorganisation committee" to explore and evaluate various options of reorganising its assets in an optimal way.
In an exchange filing last month, it had said that the committee submitted a draft "asset monetisation and business reorganisation plan (AMP)" to the domestic lenders for their consideration.

"The AMP is aimed to facilitate enhancement of networth and viability of the company and unlock value of stakeholders. Once approved, company will take necessary steps for effective implementation of the AMP in accordance with applicable laws," it had said.

Asked whether the company was looking for a joint venture partner for its Jajpur plant in Odisha, Jindal said: "Right now, no. As it is, stainless steel industry is suffering not only in India but all over the world because of huge surplus capacity in China. Other countries in Europe have levied anti-dumping duty on China. So, I don't see any possibility of a partner right now."
The primary cause of Jindal Stainless' woes lie in its lower capacity utilisation, around 55 per cent, of its annual capacity of 1.8 million tonnes, due to huge imports from China, Japan and Korea. Margins are also under "tremendous" pressure though the company, according to Jindal, is very competitive and has most modern plants.

High interest rates, poor infrastructure and costlier logistics are also putting a lot of pressure on the company's bottomline. The company, however, has no immediate payment schedule.
Jindal said domestic stainless steel industry could still be "very competitive" if policies are corrected by government like bringing down the import duty on stainless steel scrap and nickel, which India does not produce, to nil. At the same time, duty on stainless steel imports should be hiked to 10 per cent.