JSPL drops after reports of foreign lenders exploring possibility of recalling loans

Jindal Steel & Power dropped 4.75% to Rs 63.10 at 12:15 IST on BSE after reports that a group of foreign lenders of the company are exploring the extreme step of recalling loans adding up to $550 million.

Meanwhile, the S&P BSE Sensex was down 165.02 points or 0.67% at 24,494.21.

On BSE, so far 9.37 lakh shares were traded in the counter as against average daily volume of 14.6 lakh shares in the past one quarter. The stock hit a high of Rs 63.40 and a low of Rs 61.40 so far during the day. The stock had hit a 52-week low of Rs 48.20 on 12 February 2016. The stock had hit a 52-week high of Rs 200.90 on 9 March 2015. The stock had outperformed the market over the past one month till 8 March 2016, rising 7.9% compared with gains of 1.53% in the Sensex. The scrip had, however, underperformed the market in past one quarter, sliding 25.6% as against Sensex's 2.57% fall.

The mid-cap company has equity capital of Rs 91.49 crore. Face value per share is Rs 1.

As per reports, a group of foreign lenders of Jindal Steel & Power (JSPL) are exploring the pros and cons of taking the extreme step of recalling loans adding up to $550 million from the company with the company failing to comply with loan covenants ahead of the repayment schedule that starts next month. Among other things, this is triggered by JSPL's inability to service $25 million unsecured loan from a large Japanese bank, report said. Repayment for these loans is scheduled to begin from April 2016 and continue till May 2018, report said.

A loan recall or accelerated repayment puts the pressure on borrowers to pay back the loan at the earliest. Often, it can be a precursor to moving the court to recover loan. The company is reportedly been working with some banks/institutions towards various options including the 5/25 scheme to meet all obligations. In a parallel move, the local banks, led by State Bank of India (SBI), have reportedly constituted a joint lender forum (JLF) to restructure JSPL's loans in February 2016.

Sharp fall in global commodity prices and cheap imports have impacted steel sector.

On consolidated basis, JSPL reported net loss of Rs 573.48 crore in Q3 December 2015, lower than net loss of Rs 1618.78 crore in Q3 December 2014. Net sales declined 16.9% to Rs 4133.30 crore in Q3 December 2015 over Q3 December 2014.

JSPL is one of India's major steel producers with a significant presence in sectors like mining, power generation and infrastructure.

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