Are Shiny days back for Jindal Stainless?

After having a roller-coaster decade, shiny days seem to be back for the Ratan Jindal Group. After a successful exit from the debt restructuring, the group announced the consolidation of two listed companies which were created as a part of debt restructuring. Last month, Hon’ble National Company Law Tribunal Chandigarh Bench heard the petition (of merger) & the matter is reserved for the order. This article covers their decadal journey & how the group managed to sail through the debt restructuring.

Jindal Stainless Ltd. (“JSL”) is amongst the leading stainless-steel manufacturing companies in the world and India’s largest stainless-steel manufacturer. The Company operates an integrated stainless-steel plant at Jaipur, Odisha. The complex has a total stainless-steel capacity of 1.1 million tonnes per annum. The equity shares of JSL are listed on nationwide bourses.

Jindal Stainless (Hisar) Ltd. (“JSHL”) is the largest specialty stainless steel producer in India with a diversified value-added product portfolio. The company operates an integrated stainless-steel plant at Hisar, Haryana. JSHL has a total melting capacity of 0.8 million tonnes per annum. The equity shares of JSHL are listed on nationwide bourses. JSHL holds 32.02% equity stake in JSL.

History:

With establishing its first stainless steel plant in Hisar in 1970, JSL grew to become the largest stainless steel producer in India. To integrate its operation, the company set up Ferro Alloy plant in 1987 & Research & Development center in 1991. In 2008, the company announced an o.8 MTPA integrated plant in Odisha.

In 2010, on account of the operations of the Company remaining under strain due to various factors the ability of the Company to meet its repayment obligations/liabilities under the facilities availed by it from the Lenders were adversely affected and it had requested the Lenders to restructure such facilities to support the Company. Accordingly, the Company was referred to the Corporate Debt Restructuring forum, for the efficient restructuring of corporate debt (“CDR”) and a CDR package for the Company was approved by the Empowered Group of CDR (“CDR EG”).

Despite, the above restructuring the operations of JSL did not improve as envisaged due to various external factors pertaining to the economy and industry. As a result, the ability of the Company to meet its repayment obligations/ liabilities under the facilities was adversely affected and the Company approached the CDR-EG for a reworked CDR package which was subsequently approved.

The Company, after having various rounds of discussions with the CDR Lenders, and finalized a comprehensive plan of Asset Monetization cum Business Reorganisation Plan (“AMP”). The AMP was approved by the CDR EG, which entailed monetization of identified business undertaking(s) of the Company through demerger/slump sale(s) and utilization of the proceeds of the slump sale(s) in reduction of debt of the Company by an amount of ₹ 5,500 Crore.

Besides reworking of its domestic term debt obligations as stated in above, the Company also completed the restructuring of its debt obligations in relation to USD 250 million ECB facilities, outstanding of USD 147.19 million (USD 196.88 million) availed for the part financing of Odisha Phase II project.

As a part of the above said AMP, the Board of Directors of the Company in their meeting held on 29th December 2014 approved a Composite Scheme of Arrangement between the Company and its three wholly owned subsidiary companies viz. Jindal Stainless (Hisar) Limited (JSHL), Jindal United Steel Limited (JUSL) and Jindal Coke Limited (JCL) and their respective creditors and shareholders which inter-alia provided for:

• Demerger of Mining Division and Ferro Alloys Division of JSL and vesting the same in JSHL
• Slump sale of manufacturing facility at Hisar from JSL to JSHL for lump sum consideration of INR 2809 crore

Transfer of Hot Strip Mill and Coke Oven Plant from JSL to JUSL and JCL for lump sum consideration of INR 2412 crore & 492 crore respectively.