Jindal Stainless to issue shares worth Rs 200 cr to promoters

Jindal Stainless today said it will issue shares worth Rs 200.54 crore to its promoters on preferential basis to meet the conditions of reworked corporate debt restructuring (CDR) scheme.

The company, whose reworked CDR scheme was approved in September, said in a filing to the BSE that it will issue 2.71 crore shares of face value of Rs 2 each to its promoters at a price of Rs 74 per share, amounting to Rs 200.54 crore.

The shares will be issued on or before June 30, 2013 in two equal tranches, it added.

"The above preferential share offer are as part of the requirement mentioned in the letter of approval, dated September 18, 2012, issued by the CDR cell while approving the reworked corporate debt restructuring scheme of the company," Jindal Stainless (JSL) further said.

It added that company's board had approved the proposal on December 24 and now JSL will seek its shareholders' nod to issue preference shares to the promoters.

The Ratan Jindal-led company has over Rs 9,000 crore debt and is already under the CDR programme for last many months.

In 2011-12, the company was hit hard by 33% increase in interest costs, leading to the company applying for rescheduling of its debt payments before the CDR cell.

The approval was needed to maintain cash flow for its operations, particularly till its new 8 lakh tonne Odisha capacity begins production at optimum level. The new plant was commissioned at Odisha's Jajpur last year and currently it is producing at about 60-65% capacity.

The company, at present, has a total production capacity of about 1.8 million tonnes (MT) and has plans to increase it further to 2.5 MT in a couple of years.

However, its performance has been affected in recent times largely due to subdued demand, weakening of rupee and cheap imports of stainless steel from the overseas markets.

In 2011-12, the company had reported a net loss of Rs 103.90 crore and net sales of Rs 7,863.95 crore. During the first half of current fiscal, the company has reported a net loss of Rs 383.67 crore and net sales of Rs 4,663.98 crore.

During April-September period, its debt-equity ratio has increased to 5.91 from 4.29 of the similar period of FY12, its financial results for the last quarter showed.

To run its operations, the company requires about 8-9 lakh tonnes of chrome ore and 1.2 million tonnes of coal per year.

Shares of the company closed today at Rs 72.95 apiece on the BSE, up 1.25% from their previous close.