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Jindal Steel considers restructuring to cut 420B Indian rupee debt

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Jindal Steel considers restructuring to cut 420B Indian rupee debt

Jindal Steel & Power Ltd. is considering restructuring its business to cut its 420 billion Indian rupee debt, Bloomberg News reported Sept. 3, citing Chairman Naveen Jindal.

In May, the steelmaker flagged foreign asset sales and higher internal accruals to halve its debt in the next two to three years.

The plan, which would require board and regulatory approval, would involve splitting its steel, power and international businesses into three stand-alone entities. The steel unit would include the coal mines, while the foreign business would hold the Oman steel plant.

Jindal Steel will try to find prospective buyers for about 30% of its Oman unit over two to three years. The company will talk with potential buyers in December and hopes to complete a deal by March 2019.

It may also divest its Australian coal operations but is in no rush. "Coal prices are very good, so if we get a good price, we can look at that," Jindal said.

The steelmaker wants to reduce its debt ratio to 2x of pretax earnings, from about 5x currently, over the next four or five years, Jindal said. It is working to slash its debt by 15% in the current fiscal year.

In June, Jindal Steel's South African subsidiary that operates the Kiepersol coal mine in the country filed for business rescue, along with two other units of the listed South African company.

The company booked consolidated net profit of 1.10 billion rupees in the first quarter of its fiscal 2019, swinging from a net loss of 4.21 billion rupees a year earlier.

As of Aug. 31, US$1 was equivalent to 70.88 Indian rupees.