Jindal Power enters into agreement to divest 4.12% holding in India Energy Exchange

KOLKATA: Jindal Power Limited, a subsidiary of Jindal Steel & Power Limited (JSPL) has entered into a definitive agreement to divest 4.12% holding in India Energy Exchange (IEE)at an undisclosed amount. It is expected to realize the consideration within the current financial year 2015-16, a statement issued by JSPL late on Monday evening said.

This is being seen as a part of the company's effort to pare some of its piling debt burden. IEE is an energy exchange in which key stakeholders include corporates with a significant presence in the power sector. This includes the likes of Adani Power, JSW Energy besides with each stakeholder having a 5% holding. "Following the deal, JSPL's stake in IEE will reduce to 0.88%," a source who did not wish to be named pointed out.

The development assumes significance as the Naveen Jindal-led steel to power business group is saddled with huge debt, a problem that is plaguing a number of steel companies. In FY15, JSPL’s consolidated net debt stood at Rs 42,929 crore against Rs 35,419 crore in FY14.

JSPL's financials were hit by cancellation of coal blocks and burden of additional coal levy to the tune of Rs 3,300 crore in FY15 and FY16, the company said.

In a recent statement JSPL had said: "Our efforts in bringing cash into company through divestment of assets and strategic collaborations through JVs, will add to our cash flows, and also result in reduction in bank borrowings."