Jindal Stainless Moulds New Revamp Plan. (Economic Times 01.12.99)

Jindal Stainless Limited (JSL) devised a fresh restructuring plan for approval of financial institutions envisaging hiving off its Vasind division into a separate company.

The scheme has also suggested deferment of payment by Jindal Iron & Steel Company (JISCO) to its group company, JSL, till the time JISCO was in a comfortable position to pay, subject to approval of the financial institutions.

Almost five months back, financial institutions and banks had raised objections at the 'scheme of arrangement' between JSL & JISCO, which envisaged demerger of Vasind division from JSL and the subsequent merger with JISCO.

The scheme was not approved, as it was not generating cash. FIs had also directed JSL to make a 'cash natural' restructuring plan, which would allow JISCO to defer payment by a year till it was in a better position to pay.

As a part of the revised scheme, JSL has suggested options of either deferment of payment by JISCO or hiving off Vasind into a separate company.

Industry sources said JSL was more interested in hiving off Vasind division into a separate company as it would help JSL clear its balance sheet and would also allow it to focus only on the stainless steel business.

Vasind division was acquired by JISCO for a consideration of Rs. 74 crores. Out of this amount, JISCO had already paid a sum of Rs. 32 crore to JSL. According to the old scheme, JISCO was expected to pay the remaining 50% in installments over 12 -18 months.

It may be recalled that, as part of a restructuring exercise in the O.P.Jindal group, JSL had sold its Vasind division to JISCO as it planned to focus only on the stainless steel business.

Meanwhile, JISCO acquired this cold rolling unit as it had complete synergies with JISCO's existing operations. Beside, Vasind division was located adjacent to JISCO's plant, which accounted for location advantage, better management control, faster product flow, reduced working capital requirement & reduced financial cost.