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Jindal Stainless, which recently announced a restructuring plan, was seeking strategic investors but whether these were the brothers of chairman Rattan Jindal was not known, a company spokesperson told Business Standard on Wednesday.
The Delhi-based Jindal Stainless, the country’s largest stainless steel producer, was reacting to reports that brothers Sajjan Jindal, owner of JSW Steel, Naveen Jindal, owner of Jindal Steel & Power, and Prithviraj Jindal, chairman of Jindal SAW, would come to its rescue by infusing funds in their personal capacity through respective their holding companies.
“We are neither denying nor confirming (the development), since the process of identifying strategic investors is on. We cannot say if it will be them (the Jindal brothers) or some other investors. Had the plan been frozen, we would have announced it,” the Jindal Stainless spokesperson said.
An email to JSW Steel went unanswered and Jindal Steel & Power did not confirm the reports. To reduce debt and improve management of its business verticals, Jindal Stainless last week demerged its ferro-alloys, coke oven and stainless steel businesses into three different entities through a slump sale. Operations will be split among Jindal Stainless (Hisar), Jindal United and Jindal Coke. The company's debt of Rs 11,600 crore on March 31 will also be distributed among these entities.
Jindal Stainless, among the top 10 stainless steel producers in the world, has been posting losses for two years and is working on negative margins because of high expenditure and rising finance costs.
High power costs and scarcity of raw materials for its ferro-alloys unit have made operations difficult as increased Chinese stainless steel imports lower the company’s capacity utilisation.
Analysts feel if other Jindal group companies become strategic investors, there is a possibility of infusing more funds than needed.
“Going by the history of this group, when JSW Steel bought the US plates and pipes mill from Jindal Saw, it had overpaid. Group companies may tend to overpay to rescue Jindal Stainless if they are the strategic investors,” said an analyst with a foreign brokerage house.
In 2007, JSW Steel acquired the US plates and pipes mill from Delhi-based Jindal SAW for an enterprise value of $900 million.
