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We are taking steps to sell assets, but will not do distress sale: JSPL’s Ravi Uppal

We are taking steps to sell assets, but will not do distress sale: JSPL’s Ravi Uppal
JSPL managing director and chief executive officer Ravi Uppal. Photo by Ankit Kumar.

About two years after losing coal mines and undergoing financial stress, Jindal Steel and Power Ltd seems to be on a path to recovery. In an exclusive interview to InfraCircle, managing director and chief executive officer Ravi Uppal says the company expects to sell 6 million tonne (MT) steel in domestic market next year, compared with 4.2 million tonne this year.

JSPL’s quarterly loss fallen. How do you see the performance?

The third quarter was very significant because it saw the turning around of the company. In 2015, when we had lost our coal mines and paid extra cess, leading to tremendous stress, we had to virtually start from the scratch. The external environment has been challenging and very volatile. In spite of all that, we have shown our tenacity and resilience… third quarter testifies what we have been able to do. I think the company will continue to do better and we are firmly in control of business now. Our new business model is working quite well.

How do you see the performance, going forward?

I can surely tell you that in fourth quarter we should do better than the third quarter. Beyond that, we can do much better because total steel production next year will be 50% more than this year. Our new blast furnace is getting commissioned by March or mid-April. This year, we will sell 4.2 million tonne (MT) steel in India only. Next year, we will sell more than 6 MT steel in domestic market. We hope that the additional volumes will contribute a lot to the bottom line.

What is your strategy to reduce debt?

The present level of debt is something we don’t like. Out of about Rs.45,000 crore debt, close to Rs.23,000 crore is in steel business, Rs.8,500 crore in power and the remaining Rs.13,500 crore in global ventures. As the earnings improve, we would use every penny to reduce the debt. We are also taking steps to sell some assets. As we have always maintained that we have some assets, but we will not do distress sale because our assets are world class and they deserve a certain value. Once our performance begins to improve and earnings go up, the market will have a different perception and people will not offer us a distress price.

Are the talks to sell stake in the company’s Oman unit still on?

Talks are always on. We keep talking to different investors. We keep talking to people in the steel industry itself who are interested in becoming our partner. So, we will remain open.

How do you see steel market going forward, including coking coal prices?

The steel market has witnessed a lot of volatility in terms of finished products as well as raw materials. We think 2017-18 will be stable in terms of raw material prices, which is not valid at this moment. As far as global demand for steel is concerned, this year we expect the demand for steel to grow by 1-1.5%, especially in developed countries, which consume less steel. China may go down. India and rest of Asia will grow. We expect that piggyback riding on large investments that the government has proposed in infrastructure and housing, domestic demand for steel will grow by 5%, if not more.

Government is working on a policy to give preferential market access to India-made steel. What are your views on this?

It is a very good step. If we look at history, China was built using Chinese steel, so was the case with Japan and the United States. Every major economic power in the world has used its own steel. Why shouldn’t India do the same? This is one of the major steps to encourage growth of the Indian steel industry.

How much power from Tamnar power plant is currently tied up?

Our total installed capacity of power is 3400MW. As on date, we have power purchase agreement (PPA) for 1200MW. Rest of the capacity is idle. It is very bad because we have spent huge amount of money in building these assets. With UDAY being implemented and financial condition of discoms and electricity boards improving, more PPAs are likely.


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