Jindal Stainless is planning to finalize a corporate debt restructuring scheme by October end. In an interview to CNBC-TV18, the company's Director Strategy and Business Development Mr Arvind Parakh said the scheme would involve cutting its interest rates by 100 basis points (1%) something that would save Jindal Stainless about INR 30-40 crore.
Here is a verbatim transcript of the exclusive interview with Mr Arvind Parakh on CNBC-TV18.
Q - Any developments in terms of the Corporate Debt Restructuring (CDR) process?
A - We got admitted, JSL got admitted on middle of August in the CDR. The admission was made with super majority and we are in the process of finalizing the scheme which I hope should be done by the end of the month. So hopefully it should be done by the end of the month.
Q - Any changes to the form and structure as was originally planned and what happens to the total debt on your books?
A - In our case, the thing is that we have almost about Rs 6,000 crore of net debt. Largely, it is on account of our Orissa Phase II project. So the debt is still manageable and what we have requested the CDR cell and all our existing lenders is that to give us liquidity support for the next two-three years so that the project gets completed. So largely it is a liquidity support, one and second thing is that we have not asked for any major cuts or anything. Just a 1% reduction in interest rates is what we are looking at so overall net-net the scheme should get the approval from the lenders not major changes as envisaged.
Q - Can you give us numbers on what your effective interest rate payout would be now and to what extent your interest burden might come down on annualized basis starting now?
A - Interest burden could come down on an annual basis by INR 25 crore to IBR 30 crore. We are requesting our lenders to give us a mix of dollar and rupee. Our existing debt cost is somewhere around 10% to 11% and we expect it to come down between 9% to 10%. So effectively anywhere between 100-150 basis point reduction should help us in saving anywhere between INR 30 crore to INR 40 crore going forward.
Q - By when do you think your expansion plan will be completed and you will be in a better position to start servicing the debt for which the rates are coming down so that you can get back to some kind of reported profitability as well?
A - JSL has two operations. One is the Hisar operations and the other one which we are doing is phase II in Orissa. Hisar continues to throw out very strong results in terms of EBITDA and a net bottomline. We expect this phase II for which this entire expansion of capacity is being contemplated to be completed by March 2012. On a net-net basis, even in the current year on a net basis we should be positive as you would have seen even in first quarter of the results which has been announced. The PAT was INR 95 crore as compared to INR 28 crore of the corresponding quarter previous year. Now going forward our strong results at Hisar will show a net positive result at the bottomline level. So I do not see losses as we have seen last year which was largely driven by the commodity and the volatility and dollar-rupee exchange rates. Things are stabilizing, things are looking much better.
Q - There have been some reports indicating that you have acquired or are looking to acquire chrome ore assets in Turkey. Can you confirm or deny that to us and tell us what that means by way of improving your input cost situation?
A - Our endeavor has been because we have been working for the last two-three years for getting backwards in terms of mining assets. In India, it will be difficult to get any additional mining asset. So we were looking globally, and in Turkey we have made a major headway. We have bought large parcels of land because there are probable results. Chrome is a very high potential area in Turkey. We bought large parcels of land at very low rates and in the last two-six months we have been working on detailed analysis and trying to work out the extent of probable results in another two-three months time.
We have made some success, some out crops have been found out and we have started using them, positive results. We have started exporting it also. So net-net it will take sometime because the mining assets takes time. Otherwise, if we take an existing mine the cost becomes very high. So we have gone a little slow, try to acquire mines and hopefully things should turn out to be better once we are assured our backward integration of getting lumpy chrome ore.
Source - CNBC TV18
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