The Competition Commission of India on Tuesday gave its nod to JSW Steel Ltd.'s joint venture with Japan's JFE Steel Corp. to expand crude steel production capacity in Odisha. The antitrust watchdog approved the proposed combination between Bhushan Power and Steel Ltd., JSW Sambalpur Steel Ltd., JFE Steel Corp. and JSW Kalinga Steel Ltd., according to a statement.
As part of the deal announced in December, BPSL's integrated steel facility in Odisha will be transferred to a 50:50 joint venture between the two companies. Billionaire Sajjan Jindal-led JSW Group acquired BPSL in 2021 through an insolvency process. BPSL operates 4.5 MTPA integrated steel facility in Odisha.
JFE will invest a Rs 15,750 crore in two tranches for a 50% stake in the joint venture. The equity valuation of BPSL is Rs 31,500 crore and joint control will be established by March 2026.
The JV will have the capability for 10 million tonnes of steel production in the next few years, according to Jayant Acharya, joint managing director and CEO. "We turned a sick unit into a profitable one. The asset is very different from what we took over. This JV enables JSW Steel to accelerate its growth beyond 51 million tonnes," Acharya said last month.
The CEO said Rs 37,258 crore of total deleverage will happen on JSW Steel's balance sheet, which will allow India's top private steelmaker to pursue growth. The company's consolidated net debt as of September stood at Rs 79,153 crore, according to an investor presentation.
Kaustubh Kulkarni, head of mergers and acquisitions at JSW Group, said JFE will not get extra board seat through the BPSL deal. "Both partners will have equal representations in the BPSL board. The management will be taken up by the partners in rotation," he said.
Shares of JSW Steel settled 2% lower at Rs 1,159.2 apiece on the BSE, ahead of the update, as compared to a 1.3% decline in the benchmark Sensex. The stock is up 26% on a 12-month basis.
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