Top Indian Stainless Steel Mill Eyes Expansion as Debt Woes Fade
Jindal Steel repaid most of its dues and the company is now working with banks to exit the program by the end of the fiscal year.
(Bloomberg) -- Jindal Stainless Ltd., part of billionaire Savitri Jindal’s steel and power conglomerate, expects to leave behind its debt troubles by March, allowing it to boost its capacity by half over the following two years.
India’s dominant stainless steel producer had been forced into a central bank-mandated restructuring after its debts piled up. Having repaid most of its dues, the company is now working with banks to exit the program by the end of the fiscal year, Managing Director Abhyuday Jindal -- a grandson of Savitri, India’s richest woman -- said last week in an interview in New Delhi, where the company is headquartered.
“After that, we can really plan our growth journey again,” he said, which’ll involve increasing capacity to 2.4 million metric tons by 2021, from 1.6 million tons now, as the company looks to take advantage of burgeoning demand from the car, kitchenware, railway and defense sectors.
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“We will maintain financial prudence to maintain a healthy balance sheet and definitely not get into a high-leverage situation,” Jindal said. Scheduled repayments of 10 billion rupees in the next two years will further cut debt to 36 billion rupees, he said.
India’s stainless steel consumption is growing faster than that of crude steel, and usage will increase by 10 percent annually over the next decade, he said, from a current level of 2.5 million tons.
Risks to that rosy outlook include rising imports. A retreat to protectionism as a result of the trade flare-up between the U.S. and China could see metals, including stainless steel, diverted to India, mainly from countries that have free trade agreements with the south Asian nation, said Jindal, who started his career at his uncle Sajjan Jindal’s JSW Steel Ltd. and took over the reins of Jindal Stainless from his father earlier this year.
“Our request to the government is to review the free trade agreements with countries like South Korea, Indonesia, Japan, and the proposed Regional Comprehensive Economic Partnership,” he said, referring to the 16-nation Asian trade deal currently being negotiated.
--With assistance from Unni Krishnan and Rajesh Kumar Singh.
To contact the reporters on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net;Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net
To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Keith Gosman
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