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Enters into a strategic JV with JFE Steel Japan to jointly own and operate the BPSL business Partnership to help JSW Steel (JSTL) reduce debt and focus on capacity expansion

* On Dec 3rd, JSTL announced a strategic restructuring of the Bhushan Power and Steel Limited (BPSL) unit. As part of the transaction, BPSL (the step-down subsidiary of JSTL) will be transferred to JSW Sambalpur via a slump sale for a cash consideration of INR244.8b. JFE Steel Japan will invest a total of INR157.5b in two tranches for a 50% stake in the 50:50 JV. The transaction has been executed at an enterprise value of INR530b (INR315b of equity and INR210b of debt).

* As part of the deal, JSTL will receive INR320b in cash consideration. Its consolidated debt will reduce by ~INR350b (including INR50b of debt currently held by BSPL, which will also be removed from JSTL’s books). Out of INR320b, INR244b will be received by March, with the balance expected by September 2026, subject to approvals. The JV is expected to raise debt of INR210b, which will be used to pay off JSTL as part of the transaction.

* BPSL was acquired in 2021 through the IBC process at a consideration of INR193.5b. Currently, it operates a 4.5mtpa integrated steel facility in Odisha, which was expanded from 2.75mtpa post-acquisition. JSTL has turned around the BPSL operation, generating revenue of INR214.4b in FY25, with EBITDA and net profit of INR22.1b and INR2.6b, respectively. BPSL’s net debt stands at INR50b.

* With this, the company aims to reduce debt, infuse advanced technology for high-value steel production, and focus on its plan of expanding steel-making capacity to 50MTPA by FY31.

BPSL to be transferred to JV; transaction to materialize in the next few quarters

* BPSL is currently held under Piombino Steel Ltd (PSL), of which JSTL owns 82.65%, while 17.35% is held by JSW Shipping & Logistics Pvt Ltd (a promoter group entity).

* New JV entities: JSW Kalinga Steel (currently wholly owned by PSL) and its 100% subsidiary, JSW Sambalpur Steel, will directly control the operations and assets of BPSL. To streamline the structure and enable direct participation in the JV, the Board has approved the amalgamation of PSL with JSTL. As part of this process, JSTL will issue shares to JSW Shipping to buy out its 17% holding, leading to an equity dilution of ~2% in JSTL. Thereafter, BPSL will be transferred to JSW Sambalpur via a slump sale, after which JFE will acquire 50% equity in JSW Kalinga, resulting in equal ownership between JSTL and JFE.

* Post-merger, BPSL’s legal entity will remain in existence, but its steel business undertaking will be carved out and housed under the JV. This merger eliminates an intermediate promoter-owned entity, ensures direct ownership of JSW Kalinga by JSTL, simplifies governance, and provides a clean corporate structure for onboarding JFE as a 50% JV partner.

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