JSW Steel today plunged in morning trade after brokerage Credit Suisse claimed that JSW Steel had under stated its fiscal year 2012 debt by around Rs 11,900 crore.
As per Credit Suisse, the overall debt comes up to around Rs 28,500 crore, a fat amount considering the reported amount is Rs 16,600. Inspite of JSW Steel refuted these statements, the stock is trading 1.95 percent lower today at Rs 702.50 They said that their ‘financial statements have been audited by reputed chartered accountants and adhere to the Indian GAAP principles’.
On Friday Credit Suisse said is that acceptances have gone up and that hasn’t been factored in by the company. It said foreign currency acceptances have gone up significantly to around $1.5 billion from $1.2 billion, and that these have been mentioned under accounts payable instead of under debt.
Another important point is that securitised receivables have gone up by 19% to Rs 3100 crore. Credit Suisse says the receivables should have been adjusted when comparing the net debt and mentioned within the financial disclosures.
Moreover, the company’s unhedged position of dollar liabilities is close to $3 billion, which is again not mentioned by the company . With the rupee down from the end-March level, just the translation has eroded book value by Rs 54 per share or seven percent. Every one rupee fall hurts the book value by 1.8 percent. What Credit Suisse flagged as a concerns was that when looking at valuation levels today, such un-hedged liabilities would be higher in rupee terms owing to the decline in the currency.