JSW Steel has formed a joint venture with the Japanese steel major JFE Steel Corporation for the steel business of the recently acquired Bhushan Power and Steel Ltd. In an exchange filing, JSW Steel stated that the joint venture carries an equity value of Rs 31,500 crore, with JFE Steel investing Rs 15,750 crore for a 50 per cent stake.
JSW Steel added that the transaction will be by way of a slump sale for a cash consideration of Rs 24,483 crore. The company stated that the cash proceeds it receives from the transaction will strengthen its balance sheet even further and provide a clear runway for growth.
JSW Group acquired Bhushan Power and Steel in 2021 through an insolvency process. After a long corporate feud, the Supreme Court approved the steelmaker’s takeover of Bhushan Power and Steel in September this year.
Purpose of joint venture
JSW Steel said that it has increased the production capacity of Bhusan Steel from 2.75 million tonnes per annum to 4.5 million tonnes per annum, transforming a bankrupt entity into a profitable company. The company added that through this transaction, it will monetise part of its holding in BPSL.
“Today’s announcement brings together JSW’s expertise in India with JFE’s technological strengths, and will enable the joint venture to realise its growth potential and produce a variety of value‐added steels.” Jayant Acharya, Joint Managing Director and CEO of JSW Steel, said in a statement.
Masayuki Hirose, President and CEO of JFE Steel Corporation, said that by leveraging their technological strengths and jointly operating an integrated steel plant with JSW, both the companies will not only contribute to the further growth of both companies but also make a significant contribution to the development of the Indian steel industry.
JSW Steel share price
JSW Steel’s stock slipped 1.55 per cent in the intra-day trade on Wednesday, closing at Rs 1,144. In the past month, the company’s share price has declined by 4.2 per cent; however, in the last year the stock has jumped 14.5 per cent.