From being featured in the second RBI list of infamous defaulters in 2017-18 to planning a capital expenditure of ₹1,000 crore, Jai Balaji Industries has come a long way, becoming a very rare case of a successful turnaround story in the steel industry.

Hit by the sudden deallocation of a coal block by the Supreme Court and the venture into a 5 million tonne per annum greenfield expansion, the manufacturer of large ductile iron (DI) pipes faced an unprecedented challenge in 2011-12 and finally defaulted on a ₹3,400 crore loan to a consortium of 22 banks.

Though it was dragged to IBC, the company made an out-of-court settlement with lenders. A few banks assigned the loans to asset reconstruction companies – Edelweiss and Omkara — while some settled the dues directly with the company.

Even while battling the financial crisis, the company focused on improving efficiency, cutting costs, and improving the quality of its products. It manufactures DI pipes for water supply, speciality ferroalloys, and TMT bars. The turnaround point for the company emerged in 2020.

The company’s net profit in the first half of this fiscal zoomed multi-fold to ₹372 crore against ₹43 crore logged in same period last year, on better margin. Income was up 7 per cent at ₹3,065 crore (₹2,876 crore).

Aditya Jajodia, Chairman and Managing Director, Jai Balaji Industries, said that the credit for the turnaround of the company goes to the financial lenders, shareholders, and employees who had complete faith in the management throughout the entire process and believed the company would come out in flying colours.

The promoter’s family had infused ₹250 crore into the company this year to shore up the net worth and instil confidence among lenders. It recently raised ₹559 crore from Tata Capita to retire outstanding debt and allocated ₹40 crore for working capital..

Jai Balaji Industries has drawn a capex plan of about ₹1,000 crore to enhance the capacity of DI pipes and special-grade ferroalloys at its Durgapur plant in West Bengal. It is also firming up plans to set up a 50-70 MW solar power plant through a separate capex.

The company expects to complete the capacity expansion project in 18 months and aims to become net debt-free by repaying the existing debt of ₹560 crore.

The new strategy focuses on ductile iron pipes used for water supply and is benefiting from the Central government’s Jal Jeevan Mission, which funds water supply projects across the country. The sector is expected to grow at a 13-15 per cent CAGR over the near future.

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