Jindal Steel and Power Ltd will have to take additional debt, if it is ordered to pay penalty on its de-allocated coal blocks.
It is estimated that JSPL will have to pay ₹3,300 crore in penalties for mining from its de-allocated coal blocks.
The company’s consolidated net debt at the end of September 30, stood at ₹37,600 crore, nearly ₹2,000 crore more than a year ago.
“We have filed a review petition like other companies challenging the levy of the ₹295 a tonne penalty.
“But if we are to pay that penalty, we would have to take additional debt as it won’t come from internal accruals,” said K Rajagopal, Group Chief Financial Officer and Director, JSPL.
He the company will also have to raise money for taking part in the e-auction process of those blocks.
On September 24, the Supreme Court ordered the de-allocation of 204 coal blocks given to companies between 1993 and 2010 by March 31, 2015.
These included three blocks given to JSPL. The apex court had also levied a penalty of ₹295 on each tonne of coal mined from these blocks payable by the companies. Subsequently, the Government has moved an Ordinance to allow e-auction of the coal blocks. Companies whose blocks were cancelled will also be allowed to participate in the e-auction, but without any first right of refusal.
Rajagopal added the company is also awaiting the modalities of the e-auction process.
“We have to see if there is a requirement for an upfront payment. If something like that is there, then we would take debt for it also.”
Capex at ₹6,000 cr High debt has resulted in a 57 per cent increase in JSPL’s interest costs for the second quarter of 2014-15 at ₹599 crore.
The higher interest outgo led to a 12 per cent drop in consolidated net profit for the quarter to ₹400 crore against ₹455 crore in the same quarter last year.
Net revenue for the quarter stood at ₹5,143 crore against ₹4,852 crore in the year-ago period.
To keep a control on its debt burden, JSPL will maintain its capex at last year’s level of ₹6,000 crore.
The company has spent around ₹3,000 crore in the first half of the fiscal, Rajagopal said.
On Tuesday, JSPL’s shares closed 5.55 per cent higher on the BSE at ₹170.15.