JSW Steel to merge JSW Ispat

Share swap ratio fixed at 1:72

JSW Steel today announced the merger of JSW Ispat with itself to create the second largest domestic steel producer with a 14.3 million tonnes per annum production capacity.

Announcing this at a press conference here, JSW chief Sajjan Jindal said the respective boards of JSW Steel and JSW Ispat have approved the merger at 1:72 share swap ratio (shareholders of JSW Ispat will get one JSW Steel share for every 72 shares they hold).

"This merger will give us a lot of synergy in operation and economies of scale. We can now go for brownfield and expansion at Vijaynagar in Karnataka and Dolvi in Maharashtra," he said.

"We hope to complete the merger by the end of this financial year," Jindal added.

Jindal said the combined entity will be investing Rs 12,000 crore on expansion in the next two years.

JSW Steel had acquired 41 per cent stake in debt-ridden Ispat Industries from Pramod and Vinod Mittal, brothers of the steel czar L N Mittal, in December 2010 for about Rs 2,157 crore. Ispat Industries was subsequently named as JSW Ispat.

JSW Steel later increased its stake to 46.75 per cent and remains the single-largest shareholder in JSW Ispat.

Jindal said the net debt level of the merged entity will be Rs 25,200 crore with a debt to equity ratio of 1:1.15.

Post-merger the promoters of JSW Steel will hold 35.12 per cent in the merged entity, JFE Steel with 14.92 per cent stake is the second largest shareholder.

"JFE Steel will probably look into infusion of equity post-merger (to retain its stake at 15 per cent in JSW Steel)," Jindal said.

JSW Ispat has 3.3 MTPA plant at Dolvi, near Mumbai and it is a leading producer of HR coils. JSW Steel at present has 11 MTPA capacity at its two plants in Vijaynagar in Karnataka and Salem in Tamil Nadu.