The company may soon be out of SMA-2 category that it was placed under after its debt remained unpaid for more than 60 days.
Jindal Steel & Power looks set to put it's financial troubles behind after it cleared pending dues of around Rs 700 crore to banks a little over a week ago, according to the company's Chairman Naveen Jindal. The company may soon be out of SMA-2 category that it was placed under after its debt remained unpaid for more than 60 days. This could well pave the way for the Delhi-based steel and power producer to come out of the clutch of joint lenders forum.
SMA stands for special mention account and is used for troubled accounts under the norms of the Reserve Bank of India. SMA-0 is an account where the due is unpaid for up to 30 days; SMA-1 where the installment has not been paid for 30-60 days and SMA-2 where it is delayed for 60-90 days. SMA-2 is one step short of the account being declared a non-performing asset.
“Around 10 days back, we have cleared all the pending dues. We sold our oxygen plant for Rs. 1,121 crores and with that, we have cleared the pending dues of all the banks. We can proudly say that JSPL account is ‘current’ today. We may be the first story to be out of JLF (joint lenders forum led by State Bank of India),” Jindal told Moneycontrol.
The company sold the oxygen plant at Angul to SREI Equipment Finance for the above consideration and then leased it back.
DEBT REDUCTION TARGET
With the company working to increase capacity utilisations of its steel and power assets, it has affirmed its commitment to its lenders on meeting interest obligations in line with market-linked revenue potential.
Jindal said Jindal Steel -- “probably the first such large company referred to joint lenders forum to have come out of JLF” -- now aimed to more than halve it's debt by 2020 and be a “low-debt company”.
The company has a debt of Rs 24,000 crore against its domestic steel business (9 mtpa of steel manufacturing), Rs 8,500 crore under the power generation operations (3,400 MW) and Rs 12,400 crore for global business (2 mtpa integrated steel plant in Oman and 6.2 mtpa mining operations).
JSPL operates integrated steel plants of 6 million tonne (proposed capacity after current ramp-up) at Angul, 3.6 million tonne at Raigarh in Chhattisgarh and 2 million tonne at Sohar in Oman. Additionally, the company has longs and flats finished steelmaking capacities of 8 million tonne. The company also operates a 9 million tonne pelletization complex at Barbil in Odisha.
The power generation capacities of 5,050 MW include subsidiary Jindal Power’s 3,400 MW plant at Tamnar in Chhattisgarh and captive capacities of 1,650 MW combined at Chhattisgarh and Odisha. JSPL’s mining operations comprise 3.11 million tonnes of iron ore in India and 6.2 million tonne of coal across South Africa, Mozambique and Australia.
Speaking on the efforts to increase the steel output at its new plant at Angul in Odisha, Jindal said the company was now slowly ramping up its capacity there with the current month production likely to be 120,000 tonne.
“We will take it to 200,000 tonne per month by December and 360,000 tonne by March (in Angul). This year, we will produce 5.50 million tonne (total domestic steel production),” Jindal said. This will be 57 per cent higher than its FY17 production of 3.5 million tonne. Including its Oman factory, the company aimed to produce 7 million tonne of steel this financial year, he said.
The Angul plant will eventually have 6 million-tonne per year capacity. The company commissioned a 4 million tonne blast furnace there in August.
Focused on debt reduction on one hand and capacity expansion on the other, Jindal hopes to end the current financial year with earnings before interest, tax, depreciation and amortization of Rs 7,000 crore and top that with Rs 9,000 crore next year. It ended 2016-17 with EBITDA of Rs 4,658 crores.