CHENNAI: Several aspects of Jindal Steel and Power Ltd’s (JSPL) proposal to sell subsidiary Jindal Power Ltd (JPL) to a company owned by its promoter group have come under criticism, not least of which is the valuation at which it is to be sold. Having already postponed the EGM scheduled to vote on the matter and announced that it is re-examining the deal, JSPL on Monday said the valuation was arrived at through a “competitive and comprehensive process”, including two independent valuations and inputs from potential bidders.
But Shriram Subramanian, MD of shareholder advisory firm InGovern (which had recommended that shareholders vote against the deal), said that the company should release those valuation reports to shareholders and “be transparent” about the transactions. JSPL’s board had decided in April this year to sell its 96.42% stake in JPL to Worldone Pvt, a firm owned by its promoters, for Rs 3,015 crore cash. The deal also included the conversion of capital advances and deposits of Rs 4,386 crore made by JPL to JSPL into unsecured debt. Both aspects of the deal have raised questions. JSPL reiterated on Monday that it is re-examing the deal after investors “requested… to examine and simplify certain terms” around the divestment and said it is “working on simplifying terms according to feedback.
Lack of info on capital advances, says InGovern
Flagging lack of information on JPL’s capital advances of Rs 2,854 crore made towards two of JSPL’s captive power plant, InGovern said, “It is not clear as to the status of the transaction by JPL to acquire the captive power plants of JSPL for which these capital advances were made.”