 "Ravi Uppal, CEO, Jindal Steel & Power")
The glut in the steel market came soon after the coal block de-allocation for Jindal Steel & Power, pushing the company into the red. It closed 2015-16 with a 56 per cent increase in losses. Ravi Uppal, managing director and group chief executive officer, tells Jyoti Mukul the company will be divesting more assets, even as the steel market is improving. Edited excerpts:
What is the level of debt and will sale of your Tamnar power plant bring it down?
Our consolidated debt is Rs 46,000 crore. For the past six months, we were under pressure. The reduction in debt levels (through a Rs 6,500 sale deal with JSW Energy) remains to be defined. Liquidity is our pressing requirement. We had come under a crunch and were not able to meet our working capital requirement. Initially, we will get a Rs 500-crore advance, which should happen in a month or two. The remaining Rs 6,000 crore will come as equity.
Will the group sell more assets?
We are looking at divesting some more, in both steel and power.
Would you be exiting the power business?
Not at all. It is very dear to us. We are a long-term player and will expand our capacity in both (the) renewables and conventional (segments). We will also look at transmission tenders and the power distribution business.
And, after the sale, how much is your installed generation capacity?
Our capacity was 5,200 Mw, of which 3,400 Mw was with Jindal Power and the rest with JSPL. After sale of the Tamnar plant, we will have a capacity of 4,200 Mw.
Since the sale is a related-party transaction, how have the two companies complied with the (legal) requirements?
We have gone through a transparent procedure. We appointed a merchant banker. There were 12 interested parties to buy the plant, initially, including from Singapore, Japan, Malaysia and India.
The condition precedents for the sale include securing power purchase agreements (PPAs) and coal supply. How do you see these being met?
Large parts of the country require power but distribution companies are in a problem. Things will improve with the government’s Uday scheme and we see a rising number of PPAs being offered by states. We will be participating in tenders. Coal supply will also improve.
How much of power from Tamnar is tied up? What is the current plant load factor?
Earlier, our PLF was 95 per cent but after the de-allocation of coal blocks, we are running at 75-80 per cent capacity. Currently, we have a PPA with the Tamil Nadu government for 200 Mw and another 100 Mw we supply to industrial estates nearby. Some 600 Mw is tied up.
JSPL’s quarterly loss has come down by 30 per cent. How do you see the performance?
Steel is the good news. We commissioned a 1.4 million tonne plant in Oman. That market is vibrant. Our consolidated sales increased 44 per cent and Ebitda (earnings before interest, taxes, depreciation and amortisation) was up 63 per cent from the earlier quarter. We were very stressed in the third (December) quarter and did not have Ebitda to cover the financing cost. The fourth (March) quarter has been the turning point.
What does the steel market look like?
International prices of steel have gone up. China has shut down 100 million tonnes of capacity. On an annualised basis, 12-13 mt of imports were happening, which has now come down. Domestic demand is becoming more available. There is demand buoyancy in the market. The steel industry is doing better. Recovery is a matter of a quarter or two.
