JSPL to recast Rs 7,500-cr loan

Company in talks with lenders to take the debt out of its steel portfolio under the Reserve Bank's 5X25 scheme

Naveen Jindal-controlled Jindal Steel & Power Ltd (JSPL) is likely to shortly finalise an agreement with its lenders for bringing Rs 7,200-7,500 crore loan out of its steel portfolio under the 5x25 scheme of the Reserve Bank of India.

The company with Rs 44,140 crore consolidated debt on its books as on March 31, 2016 had last year brought around Rs 3,000 crore loan from its power portfolio under the scheme.

The scheme allows banks to recast long-term loan for infrastructure and core industries through periodic release of funding along with initial moratorium on debt repayment.

Banks were allowed to fix longer amortisation period for loans to projects based on the economic life or concession period of the project, with periodic refinancing.

A person close to the negotiations said the total loan on account of steel business was around Rs 8,000 crore.

Steel constituted a little less than 80 per cent of the company’s turnover of Rs 20,517 crore in 2015-16. The group has a finished steel capacity of 8.05 million tonnes per annum.

When contacted, a JSPL spokesperson did not confirm the development but said the company was working on various initiatives including re-financing, debt reduction and appropriate monetisation plans to further strengthen its balancesheet.

In February 2016, the company in a statement to the stock market said it was in talks with banks for various financing options including 5:25 scheme. Some 20-25 banks are part of a joint lenders’ forum with State Bank of India (SBI) and ICICI Bank as permanent members that approve restructuring proposals of companies. In February 2016, a JLF was formed to restructure JSPL’s loans.

The company has been trying to resolve its liquidity issues, as part of which it also agreed in May to sell its Chhattisgarh thermal power plant to brother Sajjan Jindal-controlled JSW group for Rs 6,500 crore.

JSPL would get an advance of Rs 500 crore after shareholders of the two companies approved the deal last month.

“The board of directors and shareholders of both the companies have given their approval (for the deal) and we should be getting the advance soon,” Ravi Uppal, managing director and chief executive officer, JSPL told Business Standard last month.

Debt was very large and the business cycle was not favourable, locally and globally. “So, first we put a complete lid on any new investment,” Uppal had said.

“We are working towards efficient capacity utilisation and enhancing operational efficiencies of our world-class productive assets and are confident of emerging financially stronger in 2016-17,” the spokesperson said in an email response.

After the de-allocation of the captive coal blocks, improving asset utilisation remains the key for JSPL, Motilal Oswal said in a recent report. JSPL’s financials were adversely impacted from a levy of Rs 3,300 crore under a Supreme Court directive, after the cancellation of captive mines.