Viability report: Banks seek RBI nod to upgrade JSPL account to standard

By: | Published: January 18, 2018 5:45 AM

A part of the $18-billion OP Jindal Group, JSPL has iron & steel plants in Chhattisgarh, Odisha and Jharkhand in India, and also in Oman. In the September quarter of 2017-18, RBI had asked banks to classify JSPL along with a few other companies as NPAs, as part of its annual review.

Following a positive viability assessment report for Jindal Steel & Power (JSPL), lenders have sought the Reserve Bank of India’s (RBI) permission to allow them to upgrade the company’s loan account to standard from its current non-performing asset (NPA) category, bankers told FE.(Reuters)

Following a positive viability assessment report for Jindal Steel & Power (JSPL), lenders have sought the Reserve Bank of India’s (RBI) permission to allow them to upgrade the company’s loan account to standard from its current non-performing asset (NPA) category, bankers told FE. If granted, this would lead to reversal of provisions made by banks following the account turning NPA. Under RBI guidelines, lenders need to set aside at least 15% of the outstanding loans as provisions for a bad loan; for a standard loan, the provision is 0.4%. The company’s gross debt stood at Rs 38,704 crore in the September quarter of FY18, according to Bloomberg. It reported a net loss of Rs 255 crore on revenues of Rs 3,668 crore in the same quarter. According to lenders, expansion of the company’s Angul plant is largely complete and the steelmaker has regularised repayments. “JSPL had to complete a blast furnace in the project and the company has achieved it,” a senior public sector banker said.

He added that RBI had sought a techno economic viability (TEV) study to be conducted by lenders and they have submitted the report to the central bank. A JSPL spokesperson told FE that all loan accounts of JSPL are regular and standard. “JSPL commissioned India’s largest 4 MTPA blast furnace at Angul, Odisha in August 2017. A 3 MTPA basic oxygen furnace (BOF) has been completed in late December and is scheduled to be commissioned in a few weeks,” the spokesperson said. Meanwhile, banks have already extended the repayment period of loans under the Reserve Bank of India’s (RBI) 5/25 norms, easing some stress. Lenders to JSPL include State Bank of India (SBI), Punjab National Bank, ICICI Bank, IDBI Bank, Axis Bank, HDFC Bank and Canara Bank.

Last month, FE had reported that JSPL submitted a debt resolution plan to its lenders, which included a provision for raising capital through sale of equity both in India and overseas. A part of the $18-billion OP Jindal Group, JSPL has iron & steel plants in Chhattisgarh, Odisha and Jharkhand in India, and also in Oman. In the September quarter of 2017-18, RBI had asked banks to classify JSPL along with a few other companies as NPAs, as part of its annual review. For instance, Axis Bank was told to reclassify nine standard assets as non-performing assets.

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