JSPL plans to demerge steel, power, int'l biz into three separate units

In a bid to reduce its around Rs 42,000 crore debt, Naveen Jindal-led JSPL is contemplating to demerge its steel, power and global business into three separate entities.

The financial stakeholders and prospective investors have suggested demerging Jindal Steel and Power Ltd (JSPL) into three different entities, according to company sources.

The company is "considering demerger of the domestic steel, power and international steel business as separate entities", a JSPL spokesperson said.

The suggestions, the spokesperson said, "have been received from certain sections of our stakeholders, which are under initial stages of consideration".

Giving a breakup of its current debt of around Rs 42,000, the source said JSPL's domestic steel business has a maximum debt of around Rs 20,500 crore, followed by domestic power business at around Rs 8,500 crore and global business at around Rs 13,000 crore.

Justifying the proposed demerger, the source said there are certain investors whose outlook is sector or geography wise.

JSPL's two million tonnes (MT) steel plant in Oman, which the company targets to augment to 2.4 MT this fiscal, and international iron ore assets is proposed to be under one global company, the source said.

JSPL has a an independent power capacity (IPP) of 3,400 mw and it is being proposed that it should go under another entity.

"Steel plus international coal assets are being proposed to go under the steel vertical as in Australia and Mozambique, the company has primarily coking coal mines and in South Africa it has anthracite mine. Coking coal has to be used in blast furnace," the source added.

In India JSPL has liquid steel capacity of 9.6 million tonnes per annum (MTPA) spread over its plants Angul and Raigarh.

It has finished steel capacity of around 8 MTPA with its plants in Angul, Raigarh and Patratu.

"And this (proposed steel entity) will also have captive power assets of 1,654 mw," the source said.

JSPL had reported a consolidated net profit of Rs 110 crore for the quarter ended June 30, 2018.

The private steel maker had suffered a consolidated net loss of Rs 421.43 crore in the corresponding quarter of the preceding fiscal.