Jindal Poly eyes $200 mn thermal unit IPO

The company plans to raise about $200 million by diluting up to 15% stake in the unit through an initial share sale within a year, chief financial officer Sanjeev Agarwal and executive director Samir Banerjee said in a joint interview.

“To part finance the project equity, the company is exploring various possibilities to raise $200 million, including through an IPO," said Agarwal.

Shares of the company, which were down more than 1% earlier in the day, pared all losses to trade up as much as 3.7% following the news.

The shares, valued at about ₹ 2020 crore, closed up 2.8% at ₹ 450.05 in the Bombay Stock Exchange.

Of the total project cost of ₹ 9150 crore, the company has tied up ₹ 7200 crore of loans from 22 banks, with Punjab National Bank as the lead banker, he added.

Jindal Poly will bring in equity funds as a major shareholder in the company by investing of ₹ 660 crore Agarwal said.

Of the remaining required funds, the promoters will put in about half, he said.

Jindal India Thermal Power Ltd aims to develop thermal power plants across various states with a total installed capacity of 4440 MW to be implemented in phases in next few years.

Jindal Poly owns about 63.75% of Jindal India Thermal through a special purpose vehicle Jindal India Powertech Ltd.

“There is a severe shortage of power in the country. Its a long term, profitable, sustainable business," Banerjee said.

Through the IPO, Jindal Poly targets diluting about 12-15% stake in the thermal unit, the executives said.

Supernormal growth

Jindal Poly, which posted a more than 6-fold growth in profit for October-December, is aiming at revenue of $1 billion by FY14, Agarwal said.

“The super normal profitability that we saw in the last few quarters, will continue plus-minus 5% or so in the near term, depending on the demand," Agarwal said.

Apart from Jindal Poly, other major Indian packaging players include Polyplex Corp and Uflex. Jindal Poly is the market leader in the segment.

Jindal Poly expects revenue of about ₹ 3000 crore and profit margins of 20-22% for FY2011, Agarwal said.

“The company is doing well, the prices are still quite firm, and the demand is good. So the profitability should be good," he added.

It has operations in over 40 countries and exports about 20% of its products.

“Some new products have started using polyester films like the solar panels for photovoltaic (PV) cells. There is large growth there," Banerjee said.

Traditional PV modules made by companies like First Solar and Suntech directly convert sunlight into electricity, and make up the largest chunk of the solar market.

“Immediately preceding this (demand spur), there were the recessionary years of 2008 and 2009, when many companies in Europe and U.S. closed down these operations."

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