JSW Steel on Wednesday announced a joint venture with Japan’s JFE Steel worth ₹15,750 crore, as part of which India’s largest steel producer will sell its subsidiary Bhushan Power & Steel’s integrated steel facility in Odisha to the 50:50 JV, according to a stock exchange filing.
The JV will act as a “double engine” for JSW Steel, its chief executive Jayant Acharya told media persons. The deal will help JSW Steel slash its debt by as much as ₹37,250 crore, nearly half of its current debt of ₹79,153 crore as of September-end, he said.
This deleveraging, in turn, will allow JSW Steel to grow at a faster pace, while the JV will help Bhushan Power & Steel Limited (BPSL) grow beyond the currently envisioned 10 million tonnes.
“This is a win-win deal for JSW Steel,” Acharya said. “We already have a plan to grow up to 50 million (tonnes) and have various assets which we can take further. Parallelly, the joint venture will be able to chart its own path of growth.”
JSW Steel aims to increase its production capacity to 43.4 million tonnes annually in three years from 34.2 million tonnes at present, and to 50 million tonnes by 2030-31.
BPSL will first be sold by way of a slump sale on a going concern basis to JSW Sambalpur Steel for a cash consideration of ₹24,483 crore. JSW Sambalpur is wholly owned by JSW Kalinga Steel Limited, which in turn is wholly owned by Piombino Steel Limited. About 82.65% of Piombino Steel is owned by JSW Steel, while 17.35% of the company is owned by JSW Shipping & Logistics Pvt Ltd.
JFE Steel will buy a 50% equity stake in JSW Kalinga for a total of ₹15,750 crore in two equal tranches. Following the slump sale and the related steps, JSW Kalinga will then be held jointly by JSW Steel and JFE Steel with a 50% stake each.
Debt reduction, growth
JSW Steel’s debt will decrease by ₹37,250 crore by June 2026, its senior management guided. “The cash which JSW Steel will get is ₹32,358 crore. In addition to that, we have transferred about ₹5,000 crore of debt as a part of the slump sale,” Acharya said.
On capacity expansion, he said, “What we will be doing is, we will be accelerating our own capital expenditure at our sites – Vijayanagar, Paradip. We will also be looking at accelerating Salav.”
Bhushan Power & Steel
Bhushan Power & Steel was bought for ₹19,700 crore in 2019 through the Insolvency and Bankruptcy Code. Since it became a subsidiary in October 2021, JSW Steel has invested a capex of about ₹3,500-4,500 crore.
“The joint venture will have capability to grow to 10 million tonnes and beyond,” Acharya said. “JFE’s deep technical expertise globally and JSW’s proven capability on project execution and operational excellence, will further add value to the joint venture as we grow.”
