JSW Ispat-JSW Steel merger to top league in Indian steel sector

JSW Steel Ltd (JSW Steel) and Ispat Industries Ltd now renamed as, JSW Ispat Steel Ltd, have cemented their alliance by announcing the merger of JSW Ispat with JSW Steel. The merger completes the integration of the two businesses and enables the full realisation of strategic benefits resulting from the combination.

The merger completes the integration of the two businesses and enables the full realisation of strategic benefits resulting from the combination. Post-merger the promoters of JSW Steel will hold 35.12% in the merged entity, JFE Steel with 14.92% stake will be the second largest shareholder. “They (JFE Steel) have the approval to bring in more cash and take their stake back to 15%,” said Sajjan Jindal.

The net debt level of the merged entity will be Rs 25,200 crore with a debt to equity ratio of 1:1.15. According to Seshagiri Rao, joint managing director and group CFO, the merger will bring down interest cost of JSW Ispat by Rs 250 crore. “JSW Ispat is loss making, so it is paying 3.66% more interest on loans,” he said.

The integration of JSW Ispat into JSW Steel is expected to bring significant strategic advantages with it, particularly alternative steel making technologies, ability to achieve swift capacity expansion, shore based facility and pan India expansion of market reach. The merger completes the integration and aims to capture full value of the combination.