Jindal Seeks to Raise $450 Million From Asset Sales to Cut Debt

  • Non-core asset sales part of company's plan to reduce debt
  • Jindal seeks to cut debt to under 300 billion rupees by 2020

Jindal Steel & Power Ltd. is seeking to raise 30 billion rupees ($450 million) selling non-core assets as the company with the second-highest debt among Indian steelmakers attempts to reduce it’s liabilities.

"We are trying to become asset light and not to have everything under our ownership," Jindal Steel’s Managing Director Ravi Uppal said in an interview by phone from New Delhi. The company has identified some assets that are not part of its core competence and talks are on to divest them, he said, declining to identify them.

A debt of 460 billion rupees, the most after Tata Steel Ltd., is a drag for Jindal as it struggles to boost revenue and profit in the face of a deluge of steel imports from China, Japan and Korea, sluggish power demand and a slump in the spot rates of electricity. The company is betting on asset sales and revival in demand for the alloy to help it cut its liabilities by more than 35 percent to below 300 billion rupees in the next four years, Uppal said.

The company controlled by Naveen Jindal kicked off a restructuring plan by signing an agreement with elder sibling Sajjan Jindal’s JSW Energy Ltd. on Wednesday to sell its 1,000-megawatt generator in central India. Tata Steel has 718 billion rupees of debt, according to data compiled by Bloomberg.

Jindal Steel’s shares fell 0.8 percent to 65.95 rupees in Mumbai. They have fallen 31 percent this year, making them the worst performers in the 10-company S&P BSE Metal Index.

Jindal Steel posted a loss of 3.71 billion rupees in the quarter ended Mar. 31. Mumbai-based JSW will pay at least 40 billion rupees, excluding net current assets, for the plant, it said Wednesday. Jindal Steel will be paid an additional 25 billion rupees if the plant secures a long-term power purchase agreement and fuel security, Sanjay Sagar, JSW Energy’s chief executive officer, said.

Jindal Steel is not looking to sell its other power units, Uppal said. The company has a 2,400 megawatt thermal power plant in Chhattisgarh and is developing three hydro electric projects in joint venture with the state of Arunachal Pradesh and one coal-based power project in Andhra Pradesh. Jindal Steel also owns coal-based power projects in Africa, two coking coal mines in Australia and a steel unit in Oman.

The company also runs a logistics business and a construction firm.

Before it's here, it's on the Bloomberg Terminal.