Mumbai, Dec. 30: Jindal Strips Ltd is considering a restructuring exercise that includes toning down its investments in group companies and accessing cheap foreign currency international loans to bring down its high debt levels.
The company has already appointed leading consultants Ernst & Young Ltd (E&Y) to recommend and implement the restructuring plan that will create a focused stainless steel maker and a balanced capital structure to facilitate growth in its core business.
JSL told the exchanges that this decision, taken at its board meeting today, would enable the management to increase shareholder value. The country’s largest stainless steel maker added that its board of directors has approved the appointment of Amarchand & Mangaldas and Suresh A. Shroff & Co as legal advisors to consider the legal tenability of E&Y’s restructuring proposal and assist in its implementation.
Director (finance) Arvind Parekh told The Telegraph that the company plans to bring down its “financial investments” in the group’s holding company and its subsidiary Brahmaputra Investments, among others. Though these investments are likely to be transferred to a group company, Parekh said it was too early at this point to give any details.
He added that JSL has been successful in bringing down its huge debt levels through restructuring and substituting high-cost debt. The company’s average cost of funds has now come down to around 9 per cent from the earlier level of 13 per cent. While the steel maker’s total debt is put at Rs 750 crore, the benefits of its earlier restructuring efforts are expected to be felt in the third quarter of this fiscal.
“We have never faulted on payment to institutions. Yet, we are looking at accessing international debt to refinance rupee debt. The company has made substantial exports of over $ 120 million, which will serve as a hedge,” Parekh said.