Jayaswal Neco Industries: From Bankruptcy Threat to Profitability

Jayaswal Neco Industries, founded in 1972, has successfully navigated a significant financial crisis, transforming itself from a company on the brink of bankruptcy to one delivering impressive returns. With a market capitalization exceeding Rs 7,200 crore, it is among India’s oldest and largest integrated steel and iron casting manufacturers, offering a diverse range of products from mining to finished engineering goods.

The company’s operations extend across Chhattisgarh and Maharashtra, where it produces pig iron, ductile iron pipes, and various engineering components used in sectors such as automobiles, power equipment, and construction. Jayaswal Neco’s vertical integration, which includes captive iron ore and coal mines, gives it a competitive edge over non-integrated firms, enabling efficient production and cost advantages.

The financial troubles that nearly led to bankruptcy stemmed from a downturn in the steel industry during the early to mid-2010s. The company had invested heavily in expanding its mining and steelmaking capacities, primarily funded through debt. This strategy backfired as steel prices plummeted and demand dwindled, resulting in a liquidity crisis exacerbated by high operational costs and delays in securing necessary environmental clearances.

By 2017-18, Jayaswal Neco found itself classified as one of several distressed steel companies under the Insolvency and Bankruptcy Code (IBC). The company engaged in a prolonged legal battle to avoid insolvency proceedings, ultimately succeeding when the Supreme Court allowed the withdrawal of the insolvency petition.

Path to Recovery

The company’s resurgence has been attributed to a multifaceted approach involving debt restructuring and operational improvements. With lender oversight, Jayaswal Neco implemented a structured resolution plan that included rescheduling repayments and converting portions of debt into longer-tenure instruments. This strategic maneuver provided the company with essential breathing room and stabilized its cash flows.

From 2019 onward, as steel prices began to recover and domestic infrastructure demand increased, Jayaswal Neco’s financial performance improved significantly. The company’s secured debt was reduced from Rs 5,759 crore in March 2020 to Rs 2,721 crore by March 2025, reflecting a consistent de-leveraging cycle supported by stronger cash generation and disciplined repayment practices.

In the first half of FY26, the company reported net sales of Rs 3,430 crore, a 29% increase driven by robust demand for steel, castings, and engineering products. Its EBITDA nearly doubled to Rs 650 crore, while operating margins expanded from 12.79% to 18.95%. This financial turnaround culminated in a shift from a loss of Rs 66 crore to a profit of Rs 198 crore, signaling a remarkable recovery.

Looking ahead, Jayaswal Neco has ambitious plans, including the development of a 1.5 million tonnes per annum (MnTPA) pellet plant in Raipur and an increase in iron ore mining capacity to 7 MnTPA. The company aims to enhance its operational efficiency through new IT systems and product innovation, targeting entry into higher-value steel grades and new markets.

Market Outlook and Challenges

The company’s stock has generated significant returns for investors, rising from a low of Rs 35 to around Rs 75 in just seven months. As of August 2025, Jayaswal Neco refinanced Rs 2,300 crore of high-cost non-convertible debentures (NCDs) with Tata Capital at a reduced interest rate of 12.5% per annum, extending the repayment period to 72 months. Analysts believe this refinancing will contribute to lower financing costs and improved financial flexibility.

However, concerns remain regarding the financial structure of the company. As of September 2025, 55% of the promoters’ shareholding was pledged, though half of this pledge is expected to be released following the repayment of 50% of the debt. The company’s financial flexibility could also be hindered by its high promoter pledge, limited banking relationships, and potential delays in environmental clearances for mining expansions.

Despite these challenges, Jayaswal Neco Industries has successfully transitioned from a distressed asset to a stronger, integrated player in the steel and mining sectors. With secure mining leases extending until 2055 and ongoing debt optimization efforts, the company is well-positioned for sustainable growth and enhanced profitability in the future.