JSPL - Big injustice with Minority Shareholders

By Research Desk
about 27 days ago

Jindal Steel & Power Ltd. (JSPL) promoters have shown one more unfriendly move towards minority shareholders of the company. On 20th May at 9.25 am, we carried an item in this section on JSPL. On same day at 2 pm, JSPL postponed its EGM to be held on 24th May. This EGM was to seek members approval for divestment, by way of sale of company's entire shareholding of 96.42% held by JSPL in Jindal Power Ltd. (JPL), for a total fixed consideration of Rs. 3,015 crores, to a related party and Promoter Group company, Worldone Pvt. Ltd.

Apart from this, JPL has lent an ICD of Rs. 1,532 crores to JSPL. JPL has also given an advances of Rs. 2,854 cr, for purcahse of captive power plant of JSPL at Angul, Odisha. The Acquirer of JPL, wants this Rs. 4,386 cr, (ICD & Capital Advance) to be converted in loan. This means Group company, being Acquirer of JPL will pay Rs. 3,015 cr to JSPL and will get funding of Rs. 4,386 cr, as loan. What a novel way of financing and fooling the minority shareholders.

Even Vision 2.0 of JSPL will not make it debt free, because, now this amount of Rs. 4,386 cr will be owned by the Acquirer and not by JSPL. Though debt of JPL will get reduced from JSPL, but that quantum is not known. “Most of the investors are aligned on the reduction in carbon footprint and improvement in ESG matrices, which this transaction can achieve for the Company. They have also appreciated the cash consideration from the Proposed Sale and the Company’s continued focus on debt reduction over the past few years”. This is the statement released by the company as well.

Then why this postponment of EGM?
Promoters of JSPL thinks themselves to be wise, while consider minority shareholders as immature, novice or fool?

This is not a sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.

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