NEW DELHI: The recent efforts of Jindal Steel and Power Limited (JSPL) to divest its stake in Jindal Power Ltd stem from the need to reduce its debt to below Rs 10,000 crore by the end of the current financial year and become a carbon compliant company.
However, all these efforts are part of its larger goal of becoming a 50 million tonne per annum (MTPA) capacity steel company by 2030. Talking to The New Indian Express, Managing Director VR Sharma said that the total debt of the company at the start of the financial year was Rs 22,000 crore, out of which so far they have repaid Rs 2,700 crore.
“We are trying to divest our holding in JPL. If that happens that alone would bring Rs 3,000 crore cash to the company, and liabilities worth Rs 6,000 crore would also be eliminated. So, the debt would automatically come down to belowRs 10,000 crore,” explains Sharma.
The company recently had to face stiff resistant from investors as the board had decided to sell its 96.42% stake in JPL to Worldone Pvt, a firm owned by its promoters, for Rs 3,015 crore cash, which according to a proxy advisory firm, was way below its enterprise value of Rs 10,000-12,000 crore.
Worldone has revised its offer and is now offering Rs 7,401 crore of which Rs 3,015 crore will be payable by cash, and the balance Rs 4,386 crore will be by way of assumption and takeover of liabilities and obligations of JSPL. The MD says that for the sake of transparency the company would invite bids from other players - national or international -with Rs 7,400 crore being the base price. He, however, said that Worldone would also be participating in the rebidding.
So why does the company want to exit from the power business? “In order to realise our target of becoming a 50 MTPA (from the existing 9.6 MTPA) capacity steel company, we have to hive off some of the assets so that we do not violate the carbon emission norms. In next 8-10 years, investors, lenders and buyers will stay away from companies who violate the carbon emission norms,” he elaborates. Sharma, however, says that he wants the company to grow organically and he has no interest in buying out tiny units to expand and achieve its target of 50 MTPA capacity by 2030.