No plans to raise capital before March 2018: Jindal Stainless

Debt-laden firm in no hurry to list arms, feels it won't realise assets' real value in prevailing market conditions

Jindal Stainless has no plans to raise capital through listing of its subsidiaries before March 2018, as the country's largest stainless steel maker is currently concentrating on financial and operational restructuring.

The debt-laden company is in no hurry to list its subsidiaries -- Jindal United Steel Ltd (JUSL) and Jindal Coke Ltd (JCL) -- as it feels that it will not be able to realise the assets' real value in the prevailing market conditions.

Jindal Stainless (JSL) embarked on a financial re-engineering exercise by distributing the Rs 8,580-crore debt among four firms, which will help it in cutting down interest costs by over 3 per cent.

It is also redistributing assets among three entities -- JUSL, JCL and Jindal Stainless (Hisdar) Ltd (JSHL) -- to leverage idle capacity as well as streamline operations and optimise production.

JSHL will be listed and JSL's shareholders will be issued shares by JSHL as per the share entitlement ratio of 1:1.

"We are not planning to go to the market (IPO) in near future, one is that we are not geared. Let the emerging entities stabilise their operations and at an appropriate time whenever value is perceived, then we will hit the market," JSL Senior VP (Corporate Strategy) Rajiv Rajvanshi told PTI.

Explaining the rationale, he said for the initial two and a half years, JUSL and JCL will be in project stage, so it does not make any sense in short term to go to the market.

"Because if you go to the market, the market will not see any operations for the next two and a half years and they will not assign any value to this. So, I think once these firms start their operations, the project stage is finished then we hit the market for JUSL and JCL," Rajvanshi explained.

Besides, promoters are infusing money into the projects to ensure that JSL succeeds with its financial re-engineering and operational restructuring, he added.

"We are bringing Rs 675 crore equity. Out of this, Rs 100 crore will come in stainless steel, Rs 500 crore in JUSL that family (Jindals) is bringing and Rs 75 crore in coke oven.

"On coke oven as I had mentioned Rs 200 crore is the cost of the second battery (setting up second oven), Rs 75 crore promoter funding and Rs 125 crore is debt," he said.

He further said cold rolling facility is one of the platforms where the saleability of a product increases. So, hiving off some asset which is helping sales to grow is not advisable at this stage.

"Instead of hiving off non-core assets, what we did was that whatever idle assets were there in the company, we tried to structure them in such a way that all those idle assets are fully utilised," he noted.
Rajvanshi said the company has also resisted a move by bankers to sell its Indonesian subsidiary.

"Although bankers were insisting that Indonesia should be hived off and we did explore, but in today's market the value is not being given. So we will not take any step, which will destroy shareholders value," he added.

Jindal Stainless Indonesia has a cold rolling stainless steel plant of 150,000 tonnes capacity.

Under its financial re-engineering initiative, JSL is distributing the total debt of Rs 8,580 crore among the four firms.

Of this, Rs 2,600 crore debt has been transferred to JSHL, Rs 2,400 crore to JUSL and Rs 500 crore in JCL.

The remaining Rs 3,080 crore is with JSL. Besides, JSL also has a working loan of about Rs 2,600 crore.

JSL's restructuring has been done with a composite scheme of arrangements, which was approved by the Chandigarh High Court on October 12, 2015.

On November 1, the firm had submitted the High Court order along with the scheme to the Registrar of Companies (RoC).

Through this, it aims to increase the capacity utilisation, enable backward integration, ensure long-term stability and focused management of different business verticals.