The once flourishing steelmaker Jindal Steel and Power has reported yet another fall in net profits after Ravi Uppal took over as MD & CEO of the Naveen Jindal Group flagship firm. Announcing the results for July – September 2014, the company reported a 12% fall in net profits as compared to same quarter of previous fiscal. The company which had an unblemished track record prior to the day Ravi Uppal took over as MD, a few more significant blows came on its long term ore security plans.
India’s federal police CBI registered a FIR against JSPL on a matter related to its oldest coal mine Gare Palma IV/1. The mine is anyways covered under SC order and is available to JSPL for little more than 4 1/2 months. Another inquiry has been launched into an iron ore mine JSPL wanted to develop in Jharkhand. Rubbing salt on open wounds, the government has so far refused to agree to the plea of a section of coal miners to give them a Right of First Refusal in forthcoming auctions.
Undertsanding the tough challenges ahead and a top-level leadership exodus after Ravi Uppal joining as MD, the market is abuzz with rumors that a new CEO of Steel business replacing industry veteran VR Sharma would take charge in a few weeks. A top management level headhunting firm is said to be on the lookout for the right candidate to lead JSPLs Power business.
Coal and Iron Ore security were the biggest assets of JSPL before pre-Uppal era. A lot has changed for JSPL and Naveen Jindal over the past 2 years. The Congressman no longer has a seat in Lok Sabha, and the mines allotted to his companies for captive use are slowly slipping out of their hands. Market buzz also points that the investigations by CBI and ED are proceeding fast and some more uncomfortable news is likely to hit by end of November.
A steel industry veteran who has never worked for JSPL feels that the appointment of Ravi Uppal is one of the very few wrong decisions taken by Naveen Jindal. “Reversing the fallout may take another 8 years, like the time taken by a young Naveen Jindal to build an enviable business empire to prove his mettle”, he added. But the biggest question that bothers oldtimers is the longivity of the jinxed spell of Ravi Uppal which has already doubled the debt burden of the company, without any noticeable increase in revenues and continued falling of net profits.