Jindal Steel and Power Ltd (JSPL) successfully closed their Rs 1,200 crore qualified institutional placement (QIP) recently.
JSPL’s Steel Business CEO Naushad Akhter Ansari said, “This was quite a bit of success and now this money is going to be utilised for our working capital and part of it will also be used for payments of debt.”
The company is planning to list its Oman business but are ‘waiting for the right time.’ On this, he said, “That is something which is in the process, we are also waiting for the right time to do that in that market. That is going to take a little more time”.
However, Ansari said that the power business is going through a rough phase due to coal shortage adding that they are “looking at importing coal to ramp-up power business.”
Below is the verbatim transcript of the interview.
Latha: Can you give us a sense of how you will utilise the qualified institutional placement (QIP) funds and will there be any need of a further capital requirement?
A: First I would like to share with you the entire QIP process. We were looking for something close to about Rs 900- 1,000 crore and simply because of the very strong response and very positive response from the investors, we decided to go for Rs 1,200 crore because we are getting reasonably good price. So, this was quite a success and now this money is obviously going to be utilised for our working capital, majority of it is going to go for working capital and part of it will also be used for payment of debts and so on and things like that but as we said majority is going to be for working capital. So that is way it is going to be
Anuj: Now that the QIP is done, what about the listing of the Oman business?
A: That is something which is in the process. It does take a little bit of time; we are also waiting for the right time to do that in that market. So that is going to take a little more time. It is not going to happen immediately, it might take maybe about six to eight months down the road. That is the way it is going to happen, but the work has already started.
Latha: How are things shaping up at Angul, what was the production ramp up in December and what can we expect in March?
A: Compared to what we produce in December, in the month of March we will be producing about 70 percent more than that; somewhere close to 1,80,000-1,85,000 tonne. So that is the number which is there. We are well on the path of ramping up. A plant like this, as we had mentioned earlier also, it takes about six to seven months to ramp up to 80-85 percent capacity and that is how we are doing well. So, in the next three to four months, we should be somewhere close to about 80-85 percent.
Sonia: Can you also help us a little bit with what your sales volume guidance is for the next year for FY19?
A: In the month of March we are close to about a run rate of 6 million tonne, close to that, a little less than that, but close to about 6 million tonne. In the year 2019, FY2019, in India we expect to do more the 7 million tonne. In Oman we will be doing close to about 2 million tonne. So all together, we should be having a production level of 9 million tonne between India and Oman.
Latha: What about power business, what is the plant load factor (PLF) level now and any power purchase agreements (PPAs) that you are likely to sign?
A: PPA remains an issue but the bigger issue is obviously the coal availability for the power plant business and that is something which like all other power producers, we are also struggling with. So, we are looking at all possibilities of even importing coal and so on, looking at the viability and so on, but nothing seems to be a very easy answer to this problem. Also the PPA, hardly any new PPAs are forthcoming.
Going forward, we do expect, we are already seeing the signs that the spot prices are going up and once the spot prices go up, we would also expect that some states would come forward with the PPAs and so on and then we will be looking at with full interest. However, then to answer your question is there any definitive program, it is nothing very easy to answer that, we do not have any.
Anuj: Is the deal that you signed with JSW Energy still on?
A: It remains a status quo. We are still hoping that the deal will go through. There are obviously certain CPs which were to be done and those CPs have not been fulfilled. So we would see, there are still three more months to go, we will see how it really plays out, but as of now the status quo remains.
Sonia: Can you also tell us a little bit about what the debt reduction plans are? Currently you are sitting on a very high debt of almost Rs 43,000 crore.
A: As of now we are somewhere close to about Rs 43,000 crore kind of debt which is there and going forward we do expect to generate sufficient EBITDA to start reducing this even beyond what is the repayment expected. In 2019 as I mentioned that there are obviously some capex requirement which is there and despite making those capex requirements we do expect some reduction to take place. However, in 2020, obviously major reduction should take place. So between these two years it is our expectation that we can reduce this debt by about Rs 6,000-8,000 crore.
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