JSPL stock sheds 12% as Deutsche Bank files Suspicious Activity Reports

Shares of Naveen Jindal-led Jindal Steel & Power (JSPL) tumbled 12 per cent on Monday following reports that Deutsche Bank Trust Company Americas (DBTCA) filed Suspicious Activity Reports (SARs) on fund transfers by the company for two consecutive years. The report on money laundering led to the company losing market cap of Rs 2,366 crore intraday.
 
The company, however, said all transactions by the company were part of routine business activities and that all had proper underlying assets.
 
This was revealed by leaked documents, called the FinCEN files, most of which were files sent to the US authorities by banks. Shares of the company ended at Rs 175.30 per share on the BSE. Along with the share price, Jindal Steel saw its market cap drop to Rs 17,876 crore on Monday from Rs 20, 242 crore on September 18.

 

According to reports, SARs showed that the Delhi-based steel producer received $2.48 million in 2015 and $16.8 million in 2016. During the period, the company sent money to firms based in Mauritius, Germany, and the UK and received funds from firms in Dubai and Switzerland.
 
JSPL sent a total of $4.85 million in 2015 and a sum of $12.83 million in 2016.
 
Saddled with high debt, JSPL has been trying to lighten its balance sheet. In financial year 2015-16 (FY16), the company saw its debt/Pbidt (profit before interest, depreciation and taxes) hit the highest in a decade of 13.93. It managed to bring this down to 4.7 in FY20. The company has reported losses since FY15.               

 
To bring down the debt burden further, the company sold its Oman operations in July. The enterprise value of the deal was over $1 billion.
 
With this, the company has strong debt reduction plans for FY21 as it aims to bring it down to Rs 23,000-24,000 crore from Rs 36,000 crore as of April 1.
 
The firm in its clarification to the exchanges said: “The company had fully complied with all the extant regulatory guidelines at the time of these transactions. JSPL does business transactions with numerous traders who buy steel and pellets from the company, as well as procure raw materials for the company.”

 
All such transactions are done strictly within the required legal framework and as per the law of the land. “As a responsible corporate house, we adhere to all legal requirements strictly,” it said.