JSL, Jindal Stainless (Hisar) boards approve merger in share swap of 1:1.95

Move to expand turnover of merged entity to Rs 20,000 cr, make it the only Indian firm in global top-10 list of stainless steel makers

The Boards of Jindal Stainless Limited (JSL) and Jindal Stainless (Hisar) Limited (JSHL) today approved the merger of JSHL into JSL in a share swap ratio of 1:1.95.

“The merger of JSHL in to JSL will induce a simplified capital structure, expanding the turnover of the merged business to Rs 20,000 crore. With 1.9 MTPA melt capacity, the merged entity will be the only Indian company in the league of top 10 stainless steel companies in the world,” Abhyuday Jindal, managing director at JSL and JSHL was quoted as saying.

Post the merger, JSL will be the single listed entity on the stock exchanges with promoter holding at 57 per cent, and remaining 43 percent by the public.

As per the proposed structure, the mobility business of JSL Lifestyle Limited, a domestic subsidiary of JSHL would be merged into Odisha-based JSL.

The non-mobility businesses would be carved out as a separate new entity, named Jindal Lifestyle Limited. Post restructuring, Jindal Stainless Steelway Limited (JSSL) and Jindal Lifestyle Limited will operate as Indian subsidiaries, while overseas operational subsidiaries of JSL in Spain and Indonesia will continue to operate as business units of merged JSL.

With the appointed date of April 1, 2020, the merger process is expected to be completed in H2 FY22 and merger is subject to approvals from statutory authorities, shareholders, creditors, and NCLT, said the company in its release today.

Merger of Haryana-based JSHL into JSL will not only enhance the company’s product portfolio, along with a 360-degree reach to better serve its customers, but will also offer a seamless, single-window, pan-India, as well as global network access to customers and further boost the ‘Just-in-Time’ approach.

The consolidation of businesses will recast the merged entity as an integrated, modern and ‘state-of-the-art’ manufacturing facility, bringing the diversified technology, talent and R&D under one roof.

The merger will lead to the realisation of enhanced operational synergy, with JSL’s proximity to port and raw materials, along with world-class finishing lines, and JSHL’s strategic location around key domestic consumption centres.

Furthermore, the merged entity will present reinvestment opportunities for growth by leveraging ready infrastructure at Jajpur for cost-efficient Brownfield expansions.

In 2015, Jindal Stainless initiated a demerger to distribute its debt of close to Rs 8,500 crore between four firms and cut interest costs. Besides JSL, there were three other entities.  Both JSL and JSHL were separately listed, while Jindal United Steel Ltd (JUSL) and Jindal Coke Ltd (JCL), the other two, remained private companies.

Jindal Stainless was into corporate debt restructuring twice and this had triggered the demerger move back then as there was no scope for further debt restructuring as it would make the company a non-performing asset. The demerger, allowed all four companies to operate independently.

In March 2020, Kotak Investment Advisors-managed Kotak Special Situations Fund (KSSF) announced an investment of Rs 500 crore in JSL in the form of debt and equity.

The investment was meant to help the stainless steel producer come out of the corporate debt restructuring (CDR) process as it will aid in repaying its loans and debt obligations to banks, said Kotak Investment Advisors in its release.