Indian steel companies to shed power assets to reduce debt

• 8 years ago (2016-03-29)
• David Flin

Africa 321 Asia 893 Australasia 56 Biomass 8 Climate change 21 Coal 297 Cogeneration 1 Concentrating solar 5 Cyber security 8 Decarbonisation 1 Decentralised energy 6 Demand side management 3 Demand side response 2 Digitalisation 10 Distributed energy 10 Distribution 122 Electric vehicles EVs 4 Emissions 65 Energy management 2 Equipment 2 Europe 1089 Gas 394 Gas engine plant 64 Gas fuel 2 Horizon 2 Hydroelectric 17 Hydrogen 60 Hydropower 131 Latin America 80 Maintenance 3 Marine 1 Metering 2 microgrid 5 Middle East 327 North America 1021 Nuclear 660 Offshore wind 121 Oil 19 Operations 4 Policy 9 Regulations 3 Renewables 776 smart grid 2 Solar 273 Storage 45 substation 8 Tepco 2 Tidal 2 Toshiba 4 Transmission 191 US Senate Washington 4 Wind 257

---

A number of steel makers in India are looking to divest themselves of power assets in order to stay profitable in a weak steel market. Jindal Steel and Power , and Adhumik Metaliks are two such companies looking to partially or fully exit their power portfolios. Jindal Steel and Power is expected to soon close a deal with JSW Energy for about 1000 MW of its 3400 MW coal-fired power capacity.

Three Indian steel manufacturers are under tremendous pressure to meet debt obligations. At the end of 2015, standalone debt for Adhunik Metaliks was $328 million; $1060 million for Monnet Ispat ; and $6805 million for Jindal Steel and Power. Adhunik Power has an operational power capacity of 450 MW; Jindal Steel and Power 3400 MW; and Monnet Power’s capacity of 1050 MW is still under construction. Salil Garg, Director of Corporates for Indian Ratings, said that given that these power assets are not captive in nature, they are easier to divest.

More than 40,000 MW of India’s thermal power capacity is under stress because of weaker than expected demand, lower tariffs, and the increasing debt burden of their owners. Rao said that power demand would eventually improve as steel and other infrastructure sectors raise investments.