Based on the recommendation of its audit committee, the composite scheme of arrangement amongst Jindal Stainless and its three wholly-owned subsidiaries has been approved by the company Board, it said in a BSE filing.
Jindal Stainless today got board approval to restructure its businesses that includes demerging a subsidiary and listing it on domestic bourses, a move aimed at boosting profitability and paring debt.
Based on the recommendation of its audit committee, the composite scheme of arrangement amongst Jindal Stainless and its three wholly-owned subsidiaries has been approved by the company Board, it said in a BSE filing.
The objective of the scheme, which is subject to approval of the shareholders, was unlocking value for shareholders to increase profitability, reduction of the debt and improvement of the serviceability of the debt, which now stands in excess
of Rs 8,500 crore. This will come down to below Rs 5,000 crore post restructuring, a company source said.
It also aims to increase capacity utilisation, enable the backward integration, ensure long-term stability and focused management of different business verticals, the company said.
Under the scheme, Jindal Stainless proposes to demerge its ferro alloys and mining divisions and vest them with Jindal Stainless (Hisar).
It will also transfer stainless steel making facilities in Hisar to Jindal Stainless (Hisar) on a going concern basis by way of slump sale for a lump sum consideration of over Rs 2,809 crore.
"As part of the scheme, the shareholders of the company would be issued shares by Jindal Stainless (Hisar) as per the share entitlement ratio of 1:1," it said.
Upon the scheme becoming effective, Jindal Stainless (Hisar) Ltd would seek listing of its equity shares on the BSE Ltd and National Stock Exchange and seek listing at Luxembourg Stock Exchange of its global depository shares, it said.
Jindal Stainless would also transfer the hot strip plant located in Odisha and vest it with Jindal United Steel Ltd by way of slump sale for Rs 2,412.67 crore.
The company also proposes to transfer its coke oven plant in Odisha to Jindal Coke Ltd on a going concern basis by way of a slump sale for Rs 492.64 crore.
The Board also took a note of the consent of domestic lenders to the "Asset Monetisation cum Business Reorganisation Plan" of the company.
Jindal Stainles stock price
On December 29, 2014, Jindal Stainless closed at Rs 38.90, up Rs 2.10, or 5.71 percent. The 52-week high of the share was Rs 64.40 and the 52-week low was Rs 28.50.
The latest book value of the company is Rs 8.51 per share. At current value, the price-to-book value of the company was 4.57.
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