Merger of two listed Jindal Stainless companies to spill over to FY23

NCLT yet to approve process; company filed first motion petition with tribunal nearly two years ago

The wait for merger of two listed Jindal Stainless companies is getting longer with the National Company Law Tribunal (NCLT) yet to give its approval for the process. According to officials in the know, the merger of Jindal Stainless (JSL) and Jindal Stainless (Hisar) (JSHL) has been pending at NCLT, after the boards of the companies approved it, and is likely to spill over to 2022-23.

“The Company filed the first motion petition with the NCLT Chandigarh on March 17, 2021 and is currently waiting for directions of the NCLT for convening the meeting of the equity shareholders and creditors of the companies.  The process is therefore expected to be delayed and spill over to financial year 2022-23,” Navneet Raghuvanshi, Company Secretary and Head of Legal, Jindal Stainless told Business Standard.

“The Board of Directors had approved the Scheme of merger between JSL and JSHL on December 29, 2020. With receipt of 'no adverse observation letter' from the Stock Exchanges in the first week of March 2021, the Company was hopeful of obtaining all the approvals within the second half of the financial year 2021-22,” he added.

In 2015, Jindal Stainless initiated a demerger to distribute its debt of close to Rs 8,500 crore between four firms and cut interest costs. Besides JSL, there were three other entities. Both JSL and JSHL were separately listed, while Jindal United Steel Ltd (JUSL) and Jindal Coke Ltd (JCL), the other two, remained private companies. This development had prevented the project execution delays of JSL’s large greenfield project in Odisha from affecting the operating assets in Hisar.

Jindal Stainless was into corporate debt restructuring (CDR) twice and this had triggered the demerger move back then as there was no scope for further debt restructuring as it would make the company a non-performing asset. The demerger allowed all four companies to operate independently.

In March 2020, JSL exited the CDR framework and in December 2020 the Boards of JSL and JSHL approved the merger of JSHL into JSL in a share swap ratio of 1:1.95. Post the merger, JSL is to be the single listed entity on the stock exchanges with promoter holding at 57 per cent, and remaining 43 percent by the public.

“The merger of JSHL into JSL will induce a simplified capital structure, expanding the turnover of the merged business to Rs 20,000 crore. With a stainless-steel melt production capacity of 1.9 million tonne per annum capacity, the merged entity will be the only Indian company in the league of top 10 stainless steel companies in the world,” Abhyuday Jindal, managing director at JSL and JSHL had said in a statement.