JSL submits monetisation plan to lenders to improve networth

Jindal Stainless (JSL) today said it has submitted a draft 'Asset Monetisation and Business Reorganisation Plan' to domestic lenders to enhance its networth and viability.
With erosion of 92 per cent of its four-year peak networth pushing it into "potentially sick" unit category, JSL has been working on a plan to monetise assets for paring debt.
"Reorganisation Committee, in consultation with reputed advisors, consultants and legal counsel, has submitted a draft AMP to domestic lenders of Company for their consideration," Jindal Stainless said in a filing to the BSE.
"The AMP is aimed to facilitate enhancement of the networth and viability of the Company and unlock value of the stakeholders," it added.

Without sharing further details, JSL said that after the AMP is approved, the company will take necessary steps for its effective implementation in accordance with applicable laws.
The company has been incurring losses since 2012, which on March 31, 2014, had eroded peak networth of previous four years of Rs 2,252.89 crore by 92 per cent. It had reported Rs 103.90 crore loss in 2011-12, Rs 820.82 crore loss in 2012-13 and Rs 1,390.09 crore loss in 2013-14.

The Board of Directors of JSL in February had constituted a 'Reorganization Committee' to explore and evaluate various options of reorganising its assets in an optimal way.

In August the Board had "advised the Reorganisation Committee to expedite the process of exploring various options with the concerned stakeholders".
As per the Sick Industrial Companies (Special Provisions) Act of 1985, the company now falls under "potentially sick" category. An industrial firm is categorised as "potentially sick", if its accumulated losses at the end of a financial year result in an erosion of 50 per cent or more of peak networth during the immediately preceding four years.
The company is required to report the fact to Board of Industrial and Financial Restructuring.
JSL had listed five major reasons for the erosion in networth including weak demand on economic slowdown and exceptional surge in imports of stainless steel from China due to "unfavourable duty structure".

It had earlier said that "the company has been rigorously working on a comprehensive plan of asset monetisation cum business reorganisation scheme which would entail monetisation of identified assets of company through demerger/slump sale."
The gain, it had said, would improve networth resulting in better credit worthiness and also entail substantial reduction in debt level and thus would assist it in deleveraging and in ensuring company's term-loan viability.
With 3 million tonnes per annum crude stainless steel production, India ranks as the third largest producer and second largest consumer of stainless steel.