We have nothing against the govt or their process: Ravi Uppal

Interview with managing director and group chief executive officer, JSPL

Naveen Jindal-promoted Jindal Steel & Power Ltd (JSPL) has taken the government to court for not accepting its bids for two coal blocks offered in the e-auction last year. A day after the Comptroller and Auditor General of India (CAG) pointed to the loopholes in the auction process, Ravi Uppal, managing director and group chief executive officer, JSPL, spoke to Jyoti Mukul on the report and the company's high debt level. Edited excerpts:

The CAG report on e-auction of coal blocks has criticised the government for allowing multiple bids by a single company. What are your views on the report?

It is all about perception. Our view was confirmed by the CAG report. We fully respect the auction process of the government. The outcome of such a transparent process should have been respected by the government. We had no option but to move the court. We have nothing against the government or their process. We complied like everybody else. Our plant was thrown out of gear and we had to shut down close to 1000 Mw capacity for some time. Fortunately, we have been able to buy coal in the auction.

Is JSPL looking to sell 15 per cent stake to Yamato of Japan? Will you be divesting in JSPL or your rail mill asset?

There is nothing which has shaped up till now. We are doing several things at the same time.

We are discussing different types of cooperation, maybe with six-eight parties. For example, when we were discussing the sale of 1,000 Mw of power assets to JSW, there were connects and disconnects. It takes six-seven months for things to happen.

What is the status of the sale of your 1000 Mw assets to JSW?

The board of directors and shareholders of both the companies have given their approval and we should be getting it advance soon. Once the other obligations get completed, then the transfer will happen.

We are progressing on signing of power purchase agreements (PPAs) and coal linkage. Coal linkages have been passed to the states. So, when states give PPA, they will have linkage. Once the UDAY (Ujwal DISCOM Assurance Yojana) scheme gets properly implemented, states will start floating tenders for medium-term PPAs, which is needed for good balancing of supply.

It could take four-six months for UDAY to take roots and after that I expect states to come up with PPAs. I suppose with the efforts we are making, we will be able to complete the deal before the two-year time period.

How manageable is your current debt?

The 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. The current consolidated debt level is Rs 46,000 crore. We have to spend some amount of capital for asset management.

JSPL has taken shareholders' approval for transferring 920 Mw captive power to Jindal Power Ltd (JPL). What is the intent and will it lead to disinvestment in JPL?

We wanted to bring all our power assets under one entity, so we shifted all the captive units of Jindal Steel & Power to Jindal Power as independent power producers. This consolidation has been done with the support of financial institutions. We will continue to focus on power business and we will grow. Industry has gone through difficult times from 2014 onwards. We do believe, in the long run, power has a very bright future. About the prospects of solar or wind energy, until the time energy storage systems evolve, renewable energy can only be an add-on. Solar energy cannot become the mainstay and replace thermal units.

What is the status on your Australian mines?

One of the Australian mines is operational now and a million tonnes of coking coal will be produced from it. For the second, environment clearance is on the way.

Do you plan to offload stake in the overseas assets?

You don't sell when market is low. Right now, there has been uptake in coking coal price. We are focusing on production from Australian mines. We ourselves have requirement of coking coal, so it makes no sense to sell it.