Jindal Stainless split in two to survive CDR, went debt-free by 2020, reunified by 2023

Jindal Stainless, India's largest stainless steel maker, entered the corporate debt restructuring (CDR) framework in 2009 as debt piled up on a new integrated plant in Odisha. With Chinese and ASEAN flat stainless dumping into India suppressing margins, the company faced a decade-long workout. In 2014-15, while still in CDR, the family and its bankers chose an unusual move: demerge the profitable, 50-year-old Hisar plant into a separately listed company, Jindal Stainless (Hisar), so that at least one listed entity stayed clean if the workout soured.

A 2015 operational restructuring spread ₹8,580 crore of debt across four group firms and cut JSL's own debt to about ₹3,080 crore. Managing director Abhyuday Jindal, the fourth-generation heir, then spent the late 2010s paying the workout down instead of expanding: scheduled repayments of ₹1,000 crore were set to bring group debt to ₹3,600 crore, and the promoter family infused fresh equity while Kotak Special Situations Fund lent ₹400 crore and bought roughly 5 per cent of the equity.

In March 2020 JSL formally exited CDR, having paid lenders an aggregate ₹833 crore — ₹275 crore in cash plus ₹558 crore to redeem the preference shares issued in 2017 — with no haircut taken. Net debt-to-equity had fallen from 3.2 in March 2017 to 1.3 by December 2019. Free of the framework, the company reversed its survival move: the 2022-announced merger of Hisar back into JSL took effect on March 2, 2023.

Net debt-equity fell from 3.2 to 1.3 by 2019; lenders got ₹833 crore with no haircut; the 2023 reunification created a ~3 MTPA top-10 stainless producer.

Splitting kept Hisar — profitable for nearly five decades — shielded from the CDR entity's stress, protecting jobs, customers and the group's listed reputation.

The two-structure design gave lenders a de facto ring-fence, which is partly why JSL could exit with every rupee repaid and no haircut.

Choosing deleveraging over capacity growth during the workout was the price of exit; the company only restarted its 1.6-to-2.4-million-tonne expansion plan once the framework was behind it.

Cheap Chinese and ASEAN imports lengthened the workout by crushing the margins meant to service the debt, so the exit took a decade rather than the planned few years.

When debt forces a restructuring, quarantining the profitable unit in a separate legal entity protects the crown jewel — and leaves a clean company to remerge once the crisis passes.

The reunified Jindal Stainless emerged in March 2023 with about 3 MTPA of melting capacity, ranking among the world's top ten stainless producers. Its first post-merger payout was an ₹82.34 crore special dividend, and the board re-appointed Abhyuday Jindal as managing director for five years from May 2023. Management has said the merged balance sheet — with leverage ratios among the best in the Indian metals sector — puts the company on a path toward a top-five global position.