Mumbai, July 24: Jindal Iron and Steel Company (Jisco) is embarking on a restructuring drive that could lead to the separation of operations and investments as part of a tighter focus on its steel business.
Jisco, the largest exporter of galvanised products from the country, is also the promoter of Jindal Vijaynagar Steel (JVSL). Sources say Jisco’s investments may be put under a separate “investment company” that will be listed on stock exchanges. If the restructuring goes ahead as planned, shareholders of Jisco will be given shares of the new investment company.
Speaking to The Telegraph, Jisco chief executive officer (CEO) and joint managing director Raman Madhok said RSM & Co was hired as a consultant to look into the restructuring at the company’s board meeting today. The exercise will be completed within eight months.
“The objective of the recast is to enhance shareholder value. The plan will see that neither shareholders, the company or term lenders are affected,” he added.
Early this year, Jindal Strips announced a restructuring under which its stainless steel business was spun off into a separate company called Jindal Stainless. The investment portfolio was retained in the residual company, Jindal Strips. A swap ratio of 1:2.68 was proposed.
Net at Rs 20.31 crore
Jisco unveiled a net profit of Rs 20.31 crore in April-June 2003. This came on the back of a 64 per cent increase in sales at Rs 470 crore and an 86 per cent rise in exports. The sale of its products in overseas markets at Rs 341 crore accounted for 75 per cent of net sales.
Jisco said it had used cash accruals to work off its debt. During the quarter, there was a net debt reduction of Rs 76 crore. This helped strengthen its financial structure in terms of a better debt-equity ratio.
Interest cost came down 33 per cent compared with the same quarter last year and now constitutes only 4 per cent of net sales.
The company plans to commission a benchmarking study with Hogoovens plant of CORUS during the second half of the current financial year to sustain world-class operating parameters and strategic cost reduction.
The company has proposed a preferential allotment of 12,25,000 equity shares of Rs 10 each at a price of Rs 121 per share (2.8 per cent of the equity capital of the company- post issue) to Citicorp Banking Corporation, Bahrain, (CBC) a FII registered with the Securities and Exchange Board of India said.
According to Jisco, this will enhance its “image, standing and business prospects” at home and in the international market.