Japan’s JFE to buy 50% in Bhushan’s steel business
MUMBAI: Japan’s second-largest alloy maker JFE Steel Corporation will buy a 50% stake in the steel business of Bhushan Power & Steel for Rs 15,750 crore, ramping up its play in India’s metal sector.Bhushan Power & Steel was acquired by JSW Steel in 2021 for Rs 19,350 crore through the bankruptcy process. JFE has been a long standing partner of JSW Steel since 2009, holding about a 15% stake in the BSE-listed company.To begin, JSW Steel will transfer Bhushan Power’s integrated steel facility in Odisha to JSW Sambalpur Steel, a recently incorporated entity, through a slump sale for Rs 24,483 crore. A slump sale involves the transfer of an undertaking for a lump sum consideration without assigning values to individual assets and liabilities. After the transfer, Bhushan Power will retain the cement grinding unit, also located in Odisha. JSW Sambalpur is 100% owned by JSW Kalinga, and JFE will buy a 50% stake in this company for Rs 15,750 crore in two tranches. In the first tranche, JFE will invest Rs 7,875 crore in JSW Kalinga. Both JFE and JSW Steel can appoint two directors each to the board of JSW Kalinga. Since acquiring Bhushan Power, JSW Steel has successfully turned its performance around. Previously a 2.8-million-ton sick unit, Bhushan Power is now profitable with an enhanced capacity of 4.5 million tons and employs 25,000 people. In FY25, Bhushan Power’s steel business generated a revenue of Rs 21,440 crore.
₹15.8K Cr Deal To Help JSW Steel, Which Acquired Bhushan Power & Steel In 2021, Fund Its Growth
The deal, subject to regulatory approvals, is expected to be concluded by the second half of next year. JFE and JSW Steel plan to increase JSW Kalinga’s steel production to 10 million tons, as the necessary land for this expansion is already available.The stake-sale will help JSW Steel, controlled by billionaire Sajjan Jindal, strengthen its balance sheet and fund growth. In a separate development, JSW Steel announced that it will merge Piombino Steel — the current owner of Bhushan Power — into itself. As a result, the Jindal family’s stake in JSW Steel will increase from 45% to 47%.“Since signing 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 sheets. Our relationship is now entering a new phase. 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,” said JFE Steel Corporation president and CEO Masayuki Hirose.
