In a bid to avoid "likely" short- and medium-term "cash flow mis-matches", Jindal Steel and Power (JSPL) on Thursday said it was exploring various options with lenders to reschedule payments.
"In discussion with banks, we have launched 5/25 scheme, and also exploring various options with all lenders to reschedule payments considering likely short /medium term cash flow mis-matches," JSPL said in a statement.
When these are completed, there will not be any overdue situation, the firm added.
Shares of the steel-to-power firm have taken a beating on the bourses in the last couple of months after concerns were raised over its debt situation. Investors became jittery after rating agency Crisil downgraded JSPL and assigned a negative outlook.
Shares in the company, on Thursday, settled 1.23 per cent higher at Rs 65.80 apiece on the BSE, whose benchmark Sensex index finished down 0.69 per cent.
Fund houses have an exposure worth more than Rs 2,000 crore to JSPL Group's debt instruments, sources said. For 2014-15 fiscal, JSPL had a consolidated net debt of Rs 42,929 crore against a net debt of Rs 35,419 crore in 2013-14.
On the ratings downgrade, the company said, "JSPL has an excellent track record of meeting all its financial commitments and current reduction in credit rating, in its opinion, merely presents rating down grade on technical grounds."
The company added it has met all its financial commitments till November-December 2015.
Sharing its strategy on ways to come out of the rut, JSPL said it will be in a better position to generate higher cash flows as compared to last four quarters.
"Our efforts in bringing cash into company through (i) divestment of assets and (ii) Strategic Collaborations through JVs, as previously advised will add to our cash flows, and also result in reduction in Bank Borrowings," it added.
The company said it has used this "difficult time" as an opportunity, under the dynamic leadership of our management, to drastically cut costs to become extremely efficient and nimble footed.
Besides, the company's investment in enhancing steel capacities in Angul and power capacity in Jindal Power (JPL) Tamnar has completed /commissioned; and are in stable level of operation.
"With these additional capacities and better outlook for steel demand /fair sales price realisations, and better outlook for power demand / realisation, JSPL will be in a better position to generate higher cash flows as compared to last 4 quarter," it said.
The firm said it will emerge as a "financially strong and sustainable" firm in 2016-2017 and will be able to meet its liabilities through better cash flow outlook from better demand /realisation for steel/Power, rescheduled financial commitments through 5/25 scheme and cash flow from disinvestments / JV's.
JSPL said its financials have been "adversely impacted" on account of cancellation of coal blocks and payment of additional levy on coal of over Rs 3,300 crore in 2014-15 and 2015-16 as a result of a Supreme Court order.
Besides, the steel sector globally has been impacted due to reduced demand from China and it's over capacity. Steel industry in India has been impacted in terms low sales realisation due to cheap imports affecting financial results of Indian steel companies over the last 4 quarters, it added.
The firm is also pinning its hopes on the government's focus on increasing infrastructure mainly in Rails, Roads, Airports and other Rural & Infrastructure sectors; and also thrust on 'Make In India' in Defence production etc, which has created demand and is likely to go beyond 6-7 per cent growth going forward.
Government support by announcing Minimum Import Price (MIP) started giving results in ensuring steel industry to realise fair and sustainable prices, it added.
In the power sector, through 'UDAY scheme', government's focus in enabling utilities to sign long-term PPAs, which is likely to create additional demand for power.
Also improvement in grid connectivity and availability of enough coal from Coal India's better production situation are gradually helping power industry to operate at higher PLFs, JSPL added.
For October-December quarter this fiscal, JSPL narrowed its consolidated net loss to Rs 573.48 crore. It had reported a net loss of Rs 1,618.78 crore in the corresponding period a year ago. However, its total income fell to Rs 4,366.89 crore from Rs 5,078.93 crore a year ago.
Source: Business insider