Jindal Steel Falls After Default on Debenture Interest PaymentsBy
Shares decline the most in a week in Mumbai trading Thursday
Jindal doesn’t cite reason for default, CEO declines comment
Jindal Steel & Power Ltd. slid the most in a week after saying it didn’t pay interest due on Sept. 30 on non-convertible debentures, a sign that cash flows are falling short of liabilities.
The New Delhi-based company, controlled by former lawmaker Naveen Jindal, declined 5.1 percent to 79.25 rupees as of 12:08 p.m. in Mumbai on Thursday. That’s the lowest since Sept. 29. The company listed 11 groups of securities on which it failed to make the interest payment, according to a stock exchange filing on Wednesday. It didn’t cite a reason for the default.
Jindal has reported losses for the past seven quarters and endured a two-year slump in steel prices. Its power plants have been running below capacity and it has struggled to sign long-term purchase contracts with buyers.
The company now plans to raise cash by selling assets, increasing revenue from coking coal mines in Australia and Mozambique and selling value-added steel products, Chief Executive Officer Ravi Uppal said in an interview last month.
He declined to comment on the defaults when contacted by Bloomberg News on Wednesday.
The company had 450 billion rupees ($6.75 billion) of debt and annual interest liabilities of about 30 billion rupees, Uppal said during the September interview.
“Reducing debt is our priority number one,” he said at the time. “We are not making any more capital expenditure. We have come to a stage where we would like to sweat the assets we have built.”