JSW Steel shares fell 1.5% on December 3 after JFE Steel announced that it will form 50:50 joint venture with JSW Steel for transfer of Bhushan Power & Steel integrated steel facility.
JFE will invest Rs 15,750 crore (270 billion yen) in JV for transfer of BPSL integrated steel facility. JFE Steel said the JV with JSW plans to expand crude steel production at the integrated steelworks to 10 millions tons by 2030.
JSW had acquired Bhushan Power & Steel (BPSL) in 2021 through an IBC process. "What was a 2.75 mtpa sick unit now stands proud as a profitable company with an enhanced capacity of 4.5 mtpa, employing 25,000 people," the company said.
Through this transaction, JSW will monetise part of its holding in BPSL, in order to accelerate the growth of the company, the firm said. "While doing so, the Company will bring in JFE, a trusted, long‐term strategic partner that will bring in technological expertise, and along with JSW Steel’s capability of project execution and operational excellence, will create further value for the joint venture. JSW shall continue to remain invested in, and will participate in the future value creation in the joint venture," it added.
The cash proceeds received from the transaction will strengthen the company's balance sheet even further and provide a clear runway for growth that will create
significant value for its stakeholders, it said.
JFE Steel held a 15% stake in JSW Steel at the end of the September quarter.
Speaking about the development, JSW Steel CEO & MD Jayant Acharya said, "We are delighted to announce this strategic Joint Venture with JFE Steel for our BPSL business undertaking. JFE has been a trusted partner for JSW Steel since 2009, and the relationship has strengthened over the years as both companies have collaborated on numerous initiatives. 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. India is the fastest growing major economy as well as steel market in the world, and this transaction enables JSW to accelerate its growth in a financially prudent manner, and create further value for its stakeholders."
JFE Steel Corporation President and CEO Masayuki Hirose meanwhile said, "Since we signed the strategic comprehensive alliance agreement with JSW in 2009, we have engaged in various collaborations and partnerships including capital participation; licensing of manufacturing technology for automotive steel and non‐oriented electrical steel sheets; and a joint venture for the manufacturing of grain‐oriented electrical steel sheet. Our relationship is now entering a new phase. I am confident that by leveraging our technological strengths and jointly operating an integrated steel plant in India with JSW, we 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 shares closed 1.55 percent lower at Rs 1,144 apiece on December 3.
Follow all LIVE updates from the stock markets here.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
