JSPL has been turning around in the last two years\n\n\n\nNaveen Jindal, chairman of Jindal Steel & Power Ltd, one of India's biggest steelmakers, today said the country is going through an economic slowdown, but assured investors that his company would continue to improve profits and reduce debt.\n\n\n\nLike its peers in the infrastructure and construction businesses, JSPL has very high levels of debt. During the three months ended June, the company managed to reduce its debt by around Rs 1,400 cr, but still had a net debt of Rs 37,621 cr, or about $5.4 billion, as of June. \n\n\n\nJindal said this will be brought down to less than Rs 30,000 cr over the next two years.\n\n\n\nThe high debt is preventing equity investors from getting their profits.\n\n\n\nFor example, the company paid a whopping 1,109 cr as interest for the April-June period, which was more than half of its cash earnings from its operations (EBITDA), and even more than the cost of depreciation on its equipment.\n\n\n\nOn a positive note, it was 5% less than what it paid as interest in the preceding three months.\n\n\n\nThe high debt levels had even led to market speculation about the company's financial health.\n\n\n\nHowever, Naveen Jindal said, his company was far from being knocked down.\n\n\n\n"\u2018Though there is a slowdown, our company is comfortably placed in the market with our value added and niche products," he said today.\n\n\n\nDemand for key capital goods like steel, cement and heavy machinery has taken a knock due to a cautious approach taken by industries as far as investing for growth is concerned.\n\n\n\nMoreover, a sharp fall in demand for certain goods, including automobiles and real estate, has also hurt the requirement for steel.\n\n\n\nNevertheless, said Jindal, JSPL will push its products more aggressively and continue to turn around.\n\n\n\nHe said the company managed to reduce its debt by more than Rs 4,000 in the last fiscal year. \n\n\n\n"We will continue to look to divest the non-core assets, to reduce debt to the target level," he said.\n\n\n\nThe company is generating practically no returns for its equity investors as all the profit from its operations (EBITDA) is being eaten up by depreciation costs and interest costs. \n\n\n\nFor the June quarter, the company's EBITDA was Rs 2,173 cr, while its depreciation expense -- an indicator of the company's cost of machinery -- was Rs 1,054 cr and interest costs were Rs 1,109 cr. Thanks to tax expenses, the company posted a loss of Rs 87 cr at the net level, for its equity shareholders.\n\n\n\nNaveen Jindal said the situation will turn around over the next "2-3 years" and the company will "double its EBITDA", even as its cuts down its debt by selling non-core assets. \n\n\n\nThe two-year target for EBITDA is Rs 12,000 cr per year, he said.\n\n\n\nIn the shorter term, Jindal also said the company was hopeful that the increased government focus on 'affordable housing' will drive demand for steel.\n\n\n\n"JSPL innovative products including Jindal Panther 550D TMT Rebar and prefabricated structures could help in not only building faster but with greater strength too, which could prove to be a game changer for sustainable housing," he claimed.