Prince Mathews Thomas Moneycontrol News
Jindal Stainless, the country's largest maker of stainless steel, has applied to exit corporate debt restructuring (CDR), nearly two years before the deadline.
The company had entered CDR in 2010, after a tough economic environment hampered loan repayments. It had debts of nearly Rs 8,000 crore.
"We have met all the requirements for exiting from CDR. We have turned around the operations, especially in these tough times. The banks are also in agreement with us," Abhyuday Jindal, Managing Director, Jindal Stainless Group, told Moneycontrol.
The Delhi-based company, which reported net profits last six quarters, also had an EBITDA of 26 percent in the last four quarters. "This is one of the requirements of exiting CDR, and we have fulfilled this," said Jindal.
The restructuring
As part of the restructuring, JSL's debt was redistributed among three more firms — Jindal Stainless (Hisar), which is listed and two private companies, Jindal United Steel and Jindal Coke.
The move helped in leveraging idle capacity, and bringing down the interest cost by 3.35 percent. At present, JSL has a debt in the range of Rs 4,000-5,000 crore.
While Jindal Stainless (Hisar) is a wholly owned unit of JSL, the other two companies have got equity from companies owned by PR Jindal, Sajjan Jindal and Naveen Jindal, brothers of Ratan Jindal, Chairman & Managing Director of JSL. Their mother Savitri Jindal also has equity stake in Jindal United Steel.
Turning around
As part of turning around the business, JSL set up a railway siding in the Odisha plan, bringing down logistics cost.
"Though the Paradip port is just 100km away, it is not containerized. So we were dependent on the Vishakapatnam port, which is 500km away and road transport was the only option," says Jindal, who joined the company in 2013.
To ease operations, the company built a railway siding, which has lowered costs.
In another initiative, JSL built 20 warehouses near its customers' facilities just for in-time delivery. "We are opening up to four more warehouses this year. With the warehouses, now our customers don't need to keep inventory and take from us when required."
"We will start seeing the financial benefits of these moves in the next three months," added Jindal.
The company plans to de-bottleneck its facility in Odisha and increase the capacity utilization to 119 percent from the present 95 percent.
The push, says Jindal, is timed to cater to a market that is picking up.
"The market is very strong, and so is the demand. There will growth in demand as the use of stainless steel increases with the push for lighter cars, metro coaches and wagons. We expect demand to increase from sectors like chemicals, power plants and oil and gas," he said.
Jindal added that the demand will increase from the auto sector after the government asked companies to move to BS-6. This will double the use of stainless steel in each car, from the present average of 15 kg per car to 30 kg.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
