Jindal Stainless' CDR exit enabled business sustenance during Covid crisis: CFO, Anurag Mantri

Mumbai: Jindal Stainless’ move to restructure its financials has enabled the company to exit its corporate debt restructuring programme much ahead of time, the company's chief financial officer Anurag Mantri told ET.

“A strong balance sheet with debt-equity coming down to 1.3 vs 3.2 earlier, enabled us to exit CDR just before the pandemic became widespread in India and is key to staying afloat at a time like this,” Mantri said.

The company's OCRPS were due in October, where a non-redemption would have let lenders convert their preference shares into equity shares.

"As per the CDR signed, any further delay would have diluted our company shares to lenders. We were able to finance almost Rs 400 crores of CDR using our internal accruals, and rest with Kotak's investment. Our debt in March FY20 stands around Rs 3,655 crores from Rs 4,118 crores in FY19", Mantri said.

JSL said it has pre-compensated existing lenders to about Rs 275 crores in cash, while it has fully redeemed the outstanding OCRPS, which were issued to the lenders in June 2017 paying them around Rs 558 crores in the process. The two put together, JSL has paid an aggregate Rs 833 crores. On March 2nd, Kotak Special Situations Fund (KSSF), a $1 billion fund managed by Kotak Investment Advisors Ltd (KIAL), has invested ?500 crore in debt and equity in JSL, and post-completion, Kotak will hold about 5% stake in JSL.

Following the CDR exit, analysts expected a reduction in the pledging level in the near future and that would be the next trigger for the stock. However, Mantri said that the shares pledged as collateral security and will not impact leverage levels and margins in any way.

“During the year, the Company undertook plans to enhance its 0.8 million tonnes capacity to 1.1 million tonnes. This brownfield expansion is being executed by debottlenecking and process balancing at a nominal capex of around Rs. 40 crore only,” Mantri said.

Operationally, the company was hit by the pandemic, reflecting in the company reporting for the fourth quarter a net loss of Rs 22 crore and a decline in sales volume by 2%.

“March is typically a good month but was affected due to the pandemic. However, we are making up with exports this Q1 FY21. Of the total sales, our exports are 80% and domestic sales were 20%,” said the group CFO. The company expects growth to rebound in the second half of FY21 with volume growth clocking higher by a percentage of GDP.

Going ahead in FY21, Mantri estimates demand revival from the healthcare sector, where the majority of healthcare equipment is made out of stainless steel and equally from railways and two-wheeler segments.

“No new projects were signed, but my outlook is that in FY21 healthcare is going to be a game-changer for the stainless steel industry and railway projects will pick up faster. We will have new user industries." The company expects bold measures by the Government to ban imports from FTA countries to make Atma Nirbhar Bharat a true reality.