JSPL is confident of going ahead with buyback plan: Uppal

Jindal Steel and Power has authorised the sub committee of board of directors to examine a buy-back of shares from existing shareholders of the company.

In an interview to CNBC-TV18, Ravi Uppal, managing director, JSPL confirmed of having taken an in-principle nod for the buyback programme. “We are confident of having the ability to go ahead with the buyback,” said Uppal.

Meanwhile talking about Q1 numbers, he said that the firm’s steel segment performed better than industry peers.

Read This: Steel demand remained subdued in Jan-June period: JSPL

JSPL reported a profit of Rs 494,28 crore, down 35 percent year-on-year, after share of profit/loss of associated and minority interest. Total net income from operations, including other operating income stood at Rs.4,540.27 crore, down 20 percent Y-o-Y

Below is the edited transcript of Uppal's interview to CNBC-TV18.

Q: Let us talk about capital allocation first. Can you just give us a little bit more colour on the buyback that you are planning and also what kind of cost control measures? I believe that you are going easy on most new projects. Can you just give us a little bit more clarity on that?

A: As far as buyback is concerned, we have taken a principle decision that we will go for the buyback and we have to now go through the entire process, talk to our bankers, seek the necessary approvals. So, it will take sometime before we firm up the entire details of the buyback. At this moment, I can only tell that it is our intention to go for buyback.

As far as the projects are concerned, we are very cautious on them. All the expansions and new projects that we have taken so far, are absolutely on track, but we are maintaining a good debt equity ratio. At the group level we still have a favourable debt-equity ratio in the range of about 1.3. We have not postponed any of the projects that we had taken up and they are absolutely on track.

Q: Aside from intention towards buyback there are some question marks about ability as well because all available information indicates there is only about Rs 200 crores that you guys have as cash on books. You pointed out yourself sales performance has been struggling so money has not been flowing in through that easily. How can you do the buyback?

A: If one looks at our financials, they are pretty robust and as far as steel business is concerned, I must say that we have done better than most of our peers in the market. We are very cautious in matters of sales realization.

If the domestic market was sluggish, we went in for exports and our exports have risen quite dramatically. In the domestic market we have not yielded to any pressure on the price line. We have maintained the price line. One can see that our total physical dispatches in the domestic market have gone up by 18 percent not withstanding that the market itself has grown in the last quarter by less than 1 percent. So, I am not able to fully understand the apprehension with regard to our ability to go for the buyback. The balance sheet of the company still has lot of cash.